WeWork Looking For New Funds To Pay Landlords, Finish Bankruptcy Proceedings

Bankrupt coworking giant WeWork said in a court filing that it needs to raise additional funds to see it through its reorganization, especially to continue to pay rent during the process of paring down its real estate commitments.

If WeWork isn't able to raise new money through a debtor-in-possession facility, it might not be able to complete its reorganization, the company said in its filing.

“Any new financing would serve to strengthen our ongoing operations during the bankruptcy process and help progress our Chapter 11 cases to a successful conclusion,” the filing says.

The new filing came in response to a number of WeWork's landlord creditors asking the bankruptcy judge to force WeWork to pay them rent, which they say the company is withholding. WeWork argued that the landlords should be willing to accept letters of credit.

WeWork didn't pay about $33M in January rent, a committee of the company's unsecured creditors said in a January filing.

“The Debtors cannot violate their statutory requirements in an effort to exert leverage over one of their most important creditor constituencies, and this Court should not sanction these acts,” the committee said.

Typically under bankruptcy rules, tenants keep paying rent until a lease is canceled. Failure to pay key bills during Chapter 11 bankruptcy, including rent, can thwart the reorganization plan.

WeWork said in the latest filing that the court making awards to the landlords would “risk seriously undermining the Debtors’ prospects for a successful reorganization.”

“These cases are at a critical juncture,” the filing says. “In addition to heated negotiations with most landlords, the Debtors are also actively raising a new money DIP facility.”

WeWork declared bankruptcy in November, requesting the rejection of 69 leases at that time and more since. Some of those rejections have been granted, while others are pending. The company is negotiating with other landlords to decrease rent, reduce square footage or shorten lease terms to save money.

“We have a clear line of sight to a profitable, sustainable WeWork, having reached numerous beneficial agreements with our landlord partners to-date,” a WeWork spokesperson told Bisnow by email on Thursday morning.