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Or the creditors vote for liquidation and WeWork is no more...

• hn_throwaway_99 3y ago
  No, the creditors have already voted: > 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.
  • lbwtaylor 3y ago
    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.
    • hn_throwaway_99 3y ago
      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.
      • qeternity 3y ago
        > 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.
        • marcosdumay 3y ago
          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.
          • potatopatch 3y ago
            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.
            • datadrivenangel 3y ago
              It's still profitable, it's just not financially savvy. Getting paid 50k as a software engineer is still positive income, just unsavvy compared to getting paid 150k.
      • scott_w 3y ago
        > Users are generally big fans of their services I’m also a big fan of paying below cost for my goods and services. The seller, not so much.
      • sgt101 3y ago
        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?
• voisin 3y ago
  What would the creditors get from the liquidation of a company that leases its spaces? The value of second hand office furniture? Doubt they’ll vote for this.
  • lbwtaylor 3y ago
    The asset is the positive operating properties/leases. The idea from WeWork management would be to shed the bad properties and keep the good ones and operate them as post-BK WeWork. Creditors could say, great idea, but we want to sell that remaining business for cash rather than leave it in your hands because we don't trust you to continue to run this.
    • voisin 3y ago
      > The asset is the positive operating properties/leases. This is what they are doing in terms of bankruptcy protection. A liquidation is different - there is no intent to continue operating afterward.
  • femto113 3y ago
    Definitely agree liquidation is non-starter here. They don't sign long term deals with their own customers so WeWork's only real asset is the brand. What the creditors will do is take over ownership from the equity-hodlers, then try to milk the brand for any remaining value. It's conceivable many of the building owners might actually do ok directly operating WeWork branded spaces and keeping the margin that used to go to WeWork for themselves.
• mumblemumble 3y ago
  Seems unlikely they'd go for that under any circumstances. I know they claim billions in assets, but I'm guessing it's all stuff whose resale value has tanked since 2020 and WeWork's actual liquidation value is $0 give or take.
  • dzader 3y ago
    [dead]