Chicago Firm Nearly Tops List Of Unpaid Creditors As WeWork Bankruptcy Unfolds
WeWork owes a Chicago-area real estate firm nearly $12M, placing it second-highest on the beleaguered coworking company’s list of unsecured creditors nationwide.
Wilmette-based The Alter Group is owed about $11.9M in “lease fees and related litigation,” according to WeWork’s Monday Chapter 11 bankruptcy filing. That puts it just behind New York-based U.S. Trust Co. on the coworking giant's list of creditors holding the largest unsecured claims among its $18.7B in liabilities.
Chicago-based Omni Group is also on the list, owed $2.7M in accrued unpaid rent, as is Cushman & Wakefield, owed $2.5M in what the filing lists as “trade payable.”
Alter’s claim dates back to WeWork’s decision to close its 20 West Kinzie St. location earlier this year, leaving the 17-story building it occupied 80% vacant with 12 years left on its lease, Crain’s Chicago Business reported. Although WeWork agreed to an early termination fee, it fell behind on those fee payments, and Alter filed a lawsuit in September.
Alter didn't respond to a request for comment.
WeWork also named its location at 125 South Clark St. on the 65-property list of leases it is asking the bankruptcy court to reject.
The 112K SF Clark Street location was shuttered in November 2022, one of more than three dozen singled out for closure because they didn't meet the company's design criteria, were obsolete or were in a market with “oversupply,” according to then-WeWork CEO Sandeep Mathrani.
A joint venture headed by German investor Commerz Real AG slapped WeWork with a $360K eviction suit in April, alleging nonpayment of rent and damages.
WeWork still has eight open downtown Chicago locations, although the company anticipates closing up to 100 additional locations as it works through a restructuring plan filed with the Securities and Exchange Commission.
Chicago’s overall exposure to WeWork’s bankruptcy announcement is relatively small compared to New York City, where WeWork has asked the U.S. Bankruptcy Court for the District of New Jersey to immediately reject 38 leases, well over half of the leases it hopes to rid itself of across the U.S. and Canada. Sixteen New York-based companies were left out of pocket for a combined $225M on the list, which isn't comprehensive and only includes WeWork's top 30 creditors.
But with three firms listed as being owed a total $17.1M, Chicago stands out compared to other cities caught up in the fallout. It is joined by Boston, where three creditors on the list are owed more than $7M; Washington, D.C, where about $3.6M is owed to Carr Properties; and San Francisco, where Kennedy Wilson’s 400-430 California is owed $7.8M in back rent and “related litigation.”
