WeWork is in a bad place right now. Their stock is down a dismal 98 percent since their disastrous IPO, senior executives are jumping ship, and they are struggling to pay the $1.2 billion dollars of loans that they got back in March. To help save the seemingly sinking ship, the company has hired on a consultant to help them renegotiate leases and restructure loans. But even that doesn’t prevent the possibility of bankruptcy.
As bad as bankruptcy would be for the company’s image, it might be the best option. This is America, after all, and our system has a lot of leeway for companies to use bankruptcy to help them survive. Many of the leases the company is obligated to pay are way over the market rate now that the office market has softened. It isn’t clear how much money would be left over to pay off secured creditors, unsecured creditors, and stockholders (in that order), but a bankruptcy would give them the ability to break some of their contractual obligations and still remain in operation at their best performing locations. WeWork has a powerful brand, one that they have just spent a lot of money refreshing. WeWork’s brand is so connected with co-working that the name is often used to describe the entire category, like Kleenex or Rollerblade. That alone might be enough to be worth the effort to save.