Sonder Scrambling to Stave Off Bankruptcy

For the second straight year, reports are emerging regarding a tricky spot for short-term rental operator Sonder.

The boutique apartment short-term rental company is chasing an agreement outside of court with its creditors, Bloomberg reported. The pursuit is viewed as an attempt to avoid a bankruptcy filing.

The company declined to comment to the publication.

In its most recent quarterly report, Sonder noted “substantial doubt” about its ability to remain as a going concern as liquidity toes a dangerous line next to the company’s obligations. As of the end of June, Sonder had $1 billion of assets, but $1.5 billion in liabilities.

One avenue Sonder is reportedly looking into is a review of its leasing portfolio, which spans 8,300 units across 152 properties. AlixPartners is assisting on operations, while Moelis & Co. is evaluating financial options.

About a year ago, Sonder was in a similar boat. The San Francisco-based company was reportedly negotiating with landlords and seeking partners as large lease obligations loomed and profitability remained a distant dream.

Last summer, Sonder signed a licensing deal with Marriott that brought roughly 9,000 properties into Marriott’s system under the “Sonder by Marriott Bonvoy” brand. The integration was completed this summer, leading to the exit of co-founder Francis Davidson.

The 20-year agreement provided Sonder with $126 million in financing when the company desperately needed capital after experiencing negative cash flow of $108 million and facing Nasdaq delisting notices. Share prices sank when the company disclosed financial reporting errors affecting 2022 and 2023 statements. Investors filed additional litigation last June.

Sonder went public through a SPAC merger with Gores Metropoulos II in 2022, valued at $1.9 billion. Since shares opened during the initial public offering at $199.91, the stock has crumbled. Early Monday morning, it was trading at a mere $1.43.

— Holden Walter-Warner