> The Company maintains the strong support of its key financial stakeholders and has entered into a Restructuring Support Agreement (“RSA”) with holders representing approximately 92% of its secured notes to drastically reduce the Company’s existing funded debt and expedite the restructuring process.
Perhaps. That's just one class of creditors though. Maybe they'll reject a bunch of leases and come out of bankruptcy, but they wouldn't be the first company to go into Ch 11 with high hopes and never come out.
That's a bet I'd easily take 7 days a week and twice on Sundays.
There is nothing fundamentally wrong with WeWork's core product. Users are generally big fans of their services, they have huge brand recognition and are basically synonymous with co-working spaces, and while the need for corporate office space is drastically reduced post-pandemic, the flexibility that WeWork provides is exactly what many companies want.
The problems with WeWork are nearly entirely with their capital structure. They expanded way too fast, they signed many leases that would never have been profitable (often in bizarro 0-rate environment world sweetheart deals with Adam Neumann), and their ridonculous valuation made them take on way too much debt to fund further expansion. Chapter 11 gets rid of all that. WeWork will be a much smaller company in the rather mundane business of office and property management, but it serves none of their stakeholder's interests to liquidate.
> There is nothing fundamentally wrong with WeWork's core product.
You have to justify this for a company that has just entered bankruptcy.
I suppose it depends on how you define “core”. But even if you take the most conservative definition and call their core product “office space” even that market has been thrown into massive turmoil.
There is plenty wrong with WeWork’s core product and much of what made it popular also made it unprofitable.
That phrase mostly means that the company is profitable, but it's RoI is smaller than the interest rate on its debit.
For having really nothing wrong with the company, it needs to be able to scale profitably too, by having a RoI that is larger than the interest on its assets.
The first part is clearly true for WeWork. On that strict sense, the company is quite alive, and its creditors would lose by closing it down. On the second sense, well, I don't think anybody can really say.
Profitable before considering the alternative of a guaranteed return at a higher rate is unprofitable, people were just confused (or imprecise about an irrelevant distinction) when the interest rate was near 0.
Are they viable though? The market they served is holed below the waterline by people getting the idea that they can WFH and the spread of high speed fibre. The years of the pandemic were years where (if it had been well run) a model like WeWorks could have established itself as the alternative to standard offices, but that's ship saled. Who want's to work in an openplan now?
> The Company maintains the strong support of its key financial stakeholders and has entered into a Restructuring Support Agreement (“RSA”) with holders representing approximately 92% of its secured notes to drastically reduce the Company’s existing funded debt and expedite the restructuring process.