The US's largest startup files for bankruptcy

WeWork, a venture that provides shared workspaces to companies, has filed for bankruptcy in America.

When it was founded 13 years ago, the company was a pioneer in shared workspaces and co-working office firms. However, with the pandemic leading people to start working from home, the company struggled to turn a profit as corporate firms terminated their contracts.

In the bankruptcy filing, the company stated that its assets and liabilities range between 10 and 50 billion dollars.

When its founder Adam Neumann first launched the company, WeWork had become the most valuable startup in the US with a valuation of 47 billion dollars.

IT HAS A LARGE DEBT

As of June 2023, the company has 2.9 billion dollars in net long-term debt and more than 13 billion dollars in long-term lease obligations.

Investors, including the Saudi-backed SoftBank Vision Fund, had invested in WeWork with a total valuation reaching 47 billion dollars.

WeWork, which wanted to go public in 2019 but could not do so because investors were skeptical of its business model of long-term and short-term leases, managed to go public in 2021 at a lower valuation.

The company, which raised investment from reputable firms like SoftBank or major banks like JPMorgan Chase, had become a focal point due to Neumann's strategy of very rapid growth despite failing to make a profit, as well as his erratic behavior.

SoftBank, the company's largest backer, spent tens of billions of dollars to support the venture, but the company continued to lose money. WeWork, which struggled to fill office spaces even after the COVID-19 pandemic when offices emptied out, is required to pay the rent for the buildings and its debts.