Coworking giant WeWork has filed for bankruptcy in the United States due to the ongoing impact of the Covid-19 pandemic and its unsuccessful initial public offering in 2019. The New York-based company has filed for Chapter 11 in New Jersey, revealing that its assets and liabilities range between $10 billion and $50 billion. This filing allows WeWork to continue operating as it develops a plan to repay its debts.
WeWork was founded in 2010 by Adam Neumann, who served as the company’s CEO until his departure. By 2019, WeWork was valued at $47 billion. Neumann expressed his disappointment with the bankruptcy filing and mentioned how difficult it has been for him to witness the company’s struggles. Despite this setback, the 44-year-old entrepreneur still possesses significant wealth, distinguishing him from other founders who have seen their fortunes vanish alongside their companies.
When Neumann left WeWork, he amassed a substantial amount of wealth as the company prepared for another public offering, this time through a special purpose acquisition company (SPAC). In 2021, SoftBank reportedly paid Neumann $480 million for half of his remaining WeWork stock as part of the SPAC process. Neumann filed a lawsuit after SoftBank initially attempted to retract its offer to purchase his entire $1 billion stake, according to CNBC.
In addition to the SPAC payment, Neumann received $185 million for a non-compete agreement and an extra $106 million as a settlement. Overall, it is estimated that Neumann collected over $770 million in cash solely from the 2021 SPAC process, despite no longer holding a management position at WeWork.
When WeWork went public in 2021, Neumann still possessed shares valued at $722 million, as reported by Bloomberg. However, following the bankruptcy filing, the value of these shares has become worthless.
Regarding the company’s bankruptcy, Neumann expressed his disappointment, stating, “As the co-founder of WeWork who spent a decade building the business with an amazing team of mission-driven people, the company’s anticipated bankruptcy filing is disappointing. It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before. I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”
