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Shares in troubled WeWork lost more than a third of their value in after-hours trading following a report it plans to file for bankruptcy.
The flexible workplace provider’s stock plunged by up to 35% in extended dealing on Tuesday night after the Wall Street Journal, citing sources, reported that it would seek a so-called Chapter 11 bankruptcy protection order as early as next week.
Such a move looks to give a company breathing space for a limited time so it can attempt to sort out its finances.
WeWork declined to comment on the report.
It had raised “substantial doubt” about its ability to continue operations in August, with numerous top executives, including CEO Sandeep Mathrani, departing this year.
Earlier on Tuesday, WeWork revealed an agreement with creditors for temporary postponement of payments for some of its debt.
WeWork had net long-term debt of almost $3bn as of June.
It also had more than $13bn in long-term leases at a time when rising borrowing costs due to central bank interest rate increases are hurting the commercial real estate sector.
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Shares in the New York-based firm have lost roughly 98% of their value this year.
Its flotation ambitions were realised in 2021 but at a substantially reduced valuation to the $47bn it achieved as a private firm.
Japan’s Softbank had sunk tens of billions of dollars into the company ahead of the initial public offering but WeWork has been unable to shake off investor concerns over its business model of taking long-term leases and renting them for the short term.
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