By Jyoti Jha
The popular coworking platform WeWork could be headed toward bankruptcy. This could, in turn, make the hundreds of landlords using this company all around the world consider lease concessions.
The company is $2.2 billion due in terms of rent obligations next year. Whether WeWork Cos. Inc. will recast or cancel its leases could be a determining factor in its survival.
The financial revenue of the company points toward the dynamic nature of work and an increasingly hybrid form of the workforce. To add to that, there is the double whammy” of the dealings with commercial landlords. There is an ever-growing struggle with exceptionally high-interest rates.
If the company chooses the process under Chapter 11 of the Bankruptcy Code, its landlords will have limited options.
They can either accept the available deals on rent or find a place right at the end of the repayment line. Either way, the struggles can include reduced rent obligations and, ultimately, bankruptcy for the coworking platform.
WeWork initiated the process of renegotiating with its landlord leases. The landlords, in collaboration with the company, come from 777 locations across 39 countries.
This information is in accordance with the June 30 public filing.
The renegotiations can lead to determining if the co-working company can reorganize through bankruptcy.
Chapter 11 of the U.S. Bankruptcy Code allows businesses to file for bankruptcy and come up with a repayment plan.
The chapter could mean that WeWork gets to escape onerous real estate leases.
The debtor-friendly approach of Chapter 11 can lead to landlords cutting rent or making other deals to retain the co-working company as their tenant.
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