Knotel files for bankruptcy, set to be bought by Newmark

Flex-office startup plans to trim U.S. office footprint

National /
Feb.February 01, 2021 09:15 AM
Knotel CEO Amol Sarva and Newmark CEO Barry Gosin (Sarva via Sasha Maslov; Gosin via Newmark)

Knotel CEO Amol Sarva and Newmark CEO Barry Gosin (Sarva via Sasha Maslov; Gosin via Newmark)

Knotel has filed for Chapter 11 bankruptcy and is in the process of being bought by Newmark Group.

In recent months, the flex-office provider has faced mounting lawsuits filed by landlords who claimed that the startup stopped paying rent when the pandemic emptied out offices.

The bankruptcy filing aims to aid the sale of business to an affiliate of Newmark Group, while Knotel exits some locations in the U.S., the company announced Sunday night.

“After a thorough review of strategic alternatives, we have determined that a process to sell our business and reshape our U.S. footprint is the best path forward to maximize value for our stakeholders,” said Amol Sarva, Knotel’s co-founder and CEO.

Sarva blamed the pandemic major drops in new leases and renewals in key markets, especially New York and San Francisco. “We must address this now to position our business for sustainable growth and a successful future,” he said.

But problems were emerging at Knotel before the pandemic, as its leasing fell and vacancies rose.

Knotel estimated its number of creditors at between 200 and 999, with liabilities between $1 billion and $10 billion, according to the bankruptcy petition filed with the U.S. Bankruptcy Court for the District of Delaware on Sunday. The company’s estimated assets were also listed as between $1 billion and $10 billion.

The company has obtained a $20 million commitment for debtor-in-possession financing from Newmark, Knotel said. The financing, which is subject to approval by the court, will provide liquidity to support Knotel’s day-to-day operations during the reorganization, the company said.

“We look forward to supporting Knotel through this transitional period,” said Newmark CEO Barry Gosin. “We are providing capital to Knotel so it can rightsize its business for the path forward.”

In August 2019, Knotel was valued at $1.6 billion, but is thought to be worth much less in the pandemic-ravaged market.






    Related Articles

    arrow_forward_ios
    These hotel markets have entered a depression
    These hotel markets have entered a depression
    These hotel markets have entered a depression
    Cherre CEO L.D. Salmanson (Cherre/Facebook)
    Real estate data firm Cherre raises $50M
    Real estate data firm Cherre raises $50M
    (Tropicana Las Vegas via Facebook, Bally's Corp)
    Bally’s buys Las Vegas’ Tropicana casino for $150M
    Bally’s buys Las Vegas’ Tropicana casino for $150M
    Doctors and medical professionals have remained on time with their rent payments in the past year (iStock)
    Medical offices are just what the doctor ordered for landlords
    Medical offices are just what the doctor ordered for landlords
    The rate of loans sent to special servicers continued to fall in March. (Unsplash)
    CMBS special servicing rate declines in March
    CMBS special servicing rate declines in March
    JLL CEO Christian Ulbrich. (Getty)
    JLL explores sale of China property management wing
    JLL explores sale of China property management wing
    Dollar General CEO Todd Vasos (Retail Industry Leaders Association, iStock)
    Dollar General thrives amid retail apocalypse
    Dollar General thrives amid retail apocalypse
    Bill Lee (Lee & Associates/YouTube)
    Lee & Associates founder Bill Lee dies
    Lee & Associates founder Bill Lee dies
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...