Sonder To File for Chapter 7 Bankruptcy, Liquidation

Short-term rental operator Sonder is going out of business.

The company announced on Monday afternoon it would be winding down its operations “immediately.” Furthermore, it plans to file for Chapter 7 liquidation of its business stateside and insolvency proceedings in other countries where it operates.

The company said it considered a sale of its business and operations, as well as obtaining more liquidity, but was unsuccessful in its pursuit.

“We are devastated to reach a point where a liquidation is the only viable path forward,” interim chief executive officer Janice Sears said in a statement. “We explored all viable alternatives to avoid this outcome, but we are left with no choice other than to proceed with an immediate wind-down of our operations and liquidation of our assets.”

The announcement comes only one day after Sonder’s partnership with Marriott International collapsed. Marriott terminated its licensing agreement with Sonder over the weekend, claiming the short-term operator was in default on an agreement signed only last year.

Sears said “unexpected challenges in aligning our technology frameworks” hindered the Marriott partnership.

Sonder signed the licensing deal with Marriott last summer, bringing approximately 9,000 properties into Marriott’s system under the “Sonder by Marriott Bonvoy” brand. The integration was completed this summer, resulting in the exit of Sonder co-founder Francis Davidson.

The 20-year agreement provided Sonder with $126 million in financing when the company was craving capital after dealing with negative cash flow of $108 million and facing Nasdaq delisting notices.

Share prices sank after the company disclosed financial reporting errors affecting 2022 and 2023 statements. Investors filed additional litigation last June.

Share prices were expected to tank further on Monday. The company’s market value before today’s announcement was $6.79 million, according to LSEG, a deep drop from its $2.2 billion valuation at the time of its initial public offering in 2021.

Reports emerged last month that Sonder was pursuing an agreement outside of court with its creditors, seen as an attempt to avoid a bankruptcy filing.

In its last quarterly report, Sonder cited “substantial doubt” about its ability to remain as a going concern. As of the end of June, Sonder had $1 billion of assets and $1.5 billion in liabilities.