Or the creditors vote for liquidation and WeWork is no more...
> 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.
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.
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.
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.
Getting paid 50k as a software engineer is still positive income, just unsavvy compared to getting paid 150k.
I’m also a big fan of paying below cost for my goods and services. The seller, not so much.
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.
This is what they are doing in terms of bankruptcy protection. A liquidation is different - there is no intent to continue operating afterward.