With nothing less than WeWork’s existence hanging in the balance, some of its biggest creditors are discussing what bankruptcy can do for the co-working giant.
Several fund managers that recently lent hundreds of millions to WeWork are exploring the possibility of Chapter 11 bankruptcy, the Wall Street Journal reported. People familiar with the situation told the outlet the creditors behind the discussions include Blackrock, King Street Capital and Brigade Capital.
The firms haven’t yet presented this option, along with others being taken under advisement, to WeWork. Interim chief executive officer David Tolley doesn’t want the company to go the bankruptcy route, preferring to negotiate deals with landlords to reduce rent costs.
The benefit of bankruptcy is that it could give WeWork the ability to unload some of its expensive leases and restructure its debts. Control of the company, however, would potentially be shifted to creditors that could play an outsized role in the company’s future, should it make it through bankruptcy.
The fund managers holding discussions lent $1.2 billion to WeWork in March, which accounts for half of the company’s long-term debt. The co-working company keeps burning through cash, though, losing $530 million in the first half of the year, leaving only $205 million on hand.
Read more
Commercial
National
What happens to real estate if WeWork goes bankrupt?
Commercial
New York
WeWork launches reverse stock split in NYSE survival bid
Commercial
National
WeWork warns end may be near
Should WeWork ultimately file for bankruptcy, the ripple effects across the commercial real estate industry would be enormous.
WeWork earlier this month raised “substantial doubt” about its ability to continue operations past the short-term future. This week, the company’s warrants were suspended from the New York Stock Exchange, which is initiating proceedings to have them delisted altogether.
WeWork’s common stock, on the other hand, is still being traded on the exchange, but is hovering around 12 or 13 cents on a daily basis and is in danger of being expunged from the stock exchange as well. To that end, the company is launching a 1-for-40 reverse stock split next month, which will consolidate every 40 shares into a single one, trading as a post-split stock beginning Sept. 5.
— Holden Walter-Warner