NEW YORK (AP) — Embattled co-working space provider WeWork says it expects to emerge from bankruptcy by the end of May, touting lease-restructuring efforts that it estimates will bring $8 billion in future rental savings.
Cutting back on real estate costs has been a top priority for WeWork since the New York-based company filed for Chapter 11 bankruptcy in November. At the time, WeWork said that rental liabilities accounted for about two-thirds of its operating costs as it tried to renegotiate nearly all of its leases.
In an update Tuesday, WeWork said it had “determined a final path forward” at 90% of the company's about 500 wholly owned locations in its global real estate portfolio, including through agreements to amend or reject leases.
WeWork also said it had reached an agreement with holders representing 92% of its secured notes to eliminate more than $3 billion in debt obligations.
Over the course of bankruptcy proceedings, WeWork made headlines for withholding hefty rent payments to landlords as it attempted to renegotiate leases. Lawyers for some landlords pushed back in court, saying the moves violated bankruptcy rules, The Wall Street Journal and others reported earlier this year.
WeWork first announced plans to renegotiate nearly all of its leases in September, just weeks after the company sounded the alarm over its ability to remain in business. Beyond the mounting need to cut back on its real estate portfolio, WeWork pointed to increased member churn and financial losses.
The specter of bankruptcy had hovered over WeWork for some time, with experts previously pointing to the price of the company's aggressive expansion in its early years. WeWork went public in October 2021 after its first attempt to do so two years earlier collapsed spectacularly. The debacle led to the ouster of founder and CEO Adam Neumann, whose erratic behavior and exorbitant spending spooked early investors.
Japan’s SoftBank stepped in to keep WeWork afloat, acquiring majority control over the company.