WeWork, the office sharing company, has announced the end of a "painful" restructuring phase for its office spaces across UK and Ireland.
An executive from the company vowed not to repeat the past mistakes. The firm had filed for Chapter 11 bankruptcy protection in the United States last November after racking up significant debts. However, it is hoping to rise from this situation by this month.
In its efforts to improve its financial status, WeWork has been clearing out co-working spaces that were proving unprofitable and renegotiating leases for the ones they wish to retain. On Wednesday, WeWork revealed that it had completed this labour in the UK and Ireland, describing this achievement as a "milestone" for the organisation.
The company has streamlined its premises, narrowing down from about 50 to 40 offices spread across London, Cambridge, Edinburgh, Birmingham, Manchester and Dublin. As part of its rejuvenation process, WeWorks had to close some offices in London and a high profile building in Manchester while securing new leases with landlords for rent payments.
At a global level, the company closed around 160 offices and revised more than 170 office leases, actions which it says will help reduce its future rent expenses by an estimated 12 billion US dollars (£9.4 billion). Reflecting on the journey, Ben Samuels, WeWork's Chief Revenue Officer, termed it one of the "turned out to be one of the most complex global financial reorganisations ever".
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Mr Samuels further noted, "It is still a really big business, but we had to get rid of those liabilities where we could never make money where rent was simply too high, the space we had was outdated... just not fit for purpose for today's market."
WeWork was established in 2010 and witnessed rapid global growth, but fell into difficulties when the pandemic hit and office workers were confined to their homes. The New York-based firm grappled with high costs from rent agreements, while also buckling under substantial debts and losses.
In the aftermath of the restructuring, Mr Samuels shared that opportunities for WeWork's growth still exist. However, he cautioned: "we are going to do it all very responsibly this time". The chief made a firm pledge: "We will never go through this again,".
He conceded that reviving the brand post-U. S filing news was "extremely challenging", prompting a significant communications effort to reassure UK customers that many locations were maintaining normal operations. This reassurance involved arranging activities like yoga sessions and puppy therapy in their co-working spaces, according to the boss.
As a result, the total number of occupied desks across the UK and Ireland saw a rise by a quarter in April, compared to the same period last year. Also, the number of "all access" bookings where individuals can pay extra to work from various locations experienced a surge by 34% in London and 51% in Dublin on a year-on-year basis, as told by the firm. Simultaneously, WeWork anticipates finalising its Chapter 11 filing in the US within this month.
A Chapter 11 bankruptcy filing signifies a company's intention to restructure its debts and assets for a fresh start, while continuing its business operations.
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