WeWork hires restructuring advisors amid financial woes

29 August 2023 Consulting.us 2 min. read

WeWork has hired several advisors to support its restructuring as it deals with high debt levels and financial underperformance, Bloomberg reported on Wednesday.

The co-working pioneer has hired management consultancy Alvarez & Marsal, law firm Kirkland & Ellis, and real estate advisor Hilco Global to help it explore options to avoid Chapter 11 bankruptcy, people familiar with the matter told Bloomberg.

The New York-based company’s ability to avoid bankruptcy will hinge on whether it can renegotiate its leases in expensive markets, the people said.

A few years ago, WeWork was one of the country’s most valuable startups. The company raised billions of dollars to sign longer-term leases to then subdivide and rent to clients, short-term, and at a healthy markup.

Though the pandemic and its impact on commercial real estate is a key element of WeWork’s travails, the company exhibited problems beforehand. Its planned 2019 IPO was aborted amid criticism of its governance, business model, and ability to turn a profit.

WeWork hires restructuring advisors amid financial woes

WeWork eventually went public in 2021 by combining with a special purpose acquisition company. Its shares have fallen 97% in the last 12 months while its debt has risen to distressed levels.

The NYSE last week suspended trading in WeWork’s warrants because of abnormally low trading price levels and is in the process of delisting the company.

WeWork also earlier this month added four restructuring specialists to its board: Paul Aronzon, Paul Keglevic, Elizabeth LaPuma, and Henry Miller.

Aronzon is founder of PSA Consulting, a provider of financial and business advice and fiduciary services. Before founding PSA, Aronzon led the global financial restructuring group of law firm Milbank, Tweed, Hadley & McCloy.

Keglevic was previously CEO of electric utility firm Energy Future Holdings. Before that, he was an audit partner at PwC and leader of the utilities practice at Arthur Andersen.

LaPuma most recently was head of the balance sheet advisory group at UBS. Before that, she ran Alvarez & Marsal Asset Management Services, managing a portfolio including $2.5 billion of debt and equity investments and $3.0 billion of international assets.

Miller co-founded Marblegate Asset Management and Miller Buckfire & Co. Before that he was managing director and head of the restructuring group and transportation industry group at Salomon Brothers.

“The deep financial expertise and robust business experience that each of our new directors bring to the table will add immense value as we double down on sustainably reducing costs, continuing to grow memberships and revenue, and strengthening our balance sheet,” said David Tolley, interim CEO of WeWork.

Daniel Hurwitz, Vivek Ranadivé, and Véronique Laury stepped down from the company’s board. 

WeWork’s board is searching for additional independent directors and a permanent CEO.