WeWork may run out of money and go out of business, it admitted in an SEC filing. The filing said “substantial doubt exists” that the office rental company will make it financially. What happens to WeWork next will determine what will happen to tens of thousands of people and companies who are WeWork “residents” or “members.” (These industries are laying off the most workers.)
The press has recounted WeWork’s emergence as the world’s largest office-sharing company to its present state. Its current financial situation is so poor that even vulture investors will not take a chance on a rebound. WeWork said it would try to cut its own rent costs in the buildings where its facilities are located. The success of that depends on whether these landlords have financial problems or can afford to kick WeWork out. Many of these landlords are already in trouble themselves because of the “work from home” policies of their other tenants.
Two things could happen to WeWork and, therefore, its tenants. A financial firm could take it out of Chapter 11. That would rely on breaking the leases with landlords, which could set off messy battles that would drive WeWork members away. That, in turn, makes WeWork’s revenue problems worse. It is a downward spiral.
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Alternatively, WeWork could be liquidated. Its office locations would be sold off, one by one in some cases, to other office-sharing companies. Given WeWork’s massive office footprint, these properties will not have enough buyers.
WeWork members could be without offices in some places. They will need to scrabble to find space in their neighborhoods to relocate. If WeWork cannot, some of its members must tell their employees to work from home.
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