Co-working startup WeWork files for bankruptcy protection in U.S.

[Photo by Reuters / Yonhap]

Co-working space provider WeWork Inc. has filed for bankruptcy protection in the United States just two years after going public amid serious financial difficulties.

Since its founding in 2010, WeWork had become a symbol of the shared economy and garnered global fame with astronomical investment from SoftBank Group Corp. Chairman Masayoshi Son. However, the startup – once valued at $47 billion – has collapsed after struggling to find its footing.

WeWork announced Monday (local time) that it filed for Chapter 11 bankruptcy protection in the Bankruptcy Court for the District of New Jersey.

Creditors holding 92 percent of its secured debt had agreed on a restructuring plan that would include reducing its portfolio of office leases, the company said in a press release.

The creditors are also known to have agreed to wipe out $3 billion of WeWork’s debt by converting it into equity.

According to the filing, WeWork has assets and liabilities of $15 billion and $18.6 billion, respectively. Overdue rent and lease termination fees alone total nearly $100 million.

The bankruptcy filing will only affect WeWork’s locations in the U.S. and Canada, and operations in other regions, including South Korea, will continue as usual. The company operated 777 offices in 39 countries at the end of June this year.

WeWork entered Korea in 2016 and has operated 19 shared office spaces in Seoul, Busan, and other cities across the country, starting with its first location near Gangnam Station.

There are concerns, in the meantime, that WeWork’s bankruptcy may signal the end of the office sharing economy business model.