The trading of WeWork stock was temporarily suspended on Monday amid speculation that the company, previously valued at $47 billion, is considering filing for bankruptcy.

Last week, sources familiar with the matter revealed to The Wall Street Journal and other media outlets that WeWork was preparing to declare Chapter 11 bankruptcy protection this week.

Last week, a representative from WeWork stated that the company does not address rumors and did not respond promptly to messages following the suspension of trading in the company’s stock on Monday.

Two years ago, the shares of WeWork were priced at over $400, but on Monday they were available for less than $1.

For a while now, the possibility of WeWork going bankrupt has been a concern. In August, the company in New York expressed concerns about its sustainability. However, signs of trouble had actually started surfacing a few years back.

WeWork is facing consequences for its ambitious growth during its initial stages. The company became publicly traded in October 2021, after its initial attempt two years prior ended in a dramatic failure. This failure resulted in the removal of founder and CEO Adam Neumann, whose unpredictable actions and excessive spending unsettled early investors.

SoftBank, a Japanese company, intervened to save WeWork by gaining majority ownership of the company.

Despite attempts to improve the company’s performance after Neumann’s exit, which included reducing operating expenses and increasing revenue, WeWork has faced challenges in a commercial real estate industry impacted by high borrowing costs and a change in workplace dynamics with more employees working remotely.

In September, WeWork stated its intentions to renegotiate the majority of its leases. CEO David Tolley pointed out that the company’s lease obligations made up over two-thirds of its operating costs in the second quarter of this year, which he deemed as excessively high and not in line with current market conditions.

In the previous month, WeWork did not make large interest payments and instead initiated a 30-day grace period before facing a default. Additionally, WeWork announced a forbearance agreement with bondholders last week, giving an extra week for negotiations before facing a default.

Source: wral.com