WeWork seeking to exit some Canadian locations as part of bankruptcy filings
WeWork Inc. is seeking an early exit of several Canadian leases as part of bankruptcy proceedings for the once high-flying office sharing company.
Filings show the company is looking to get out of two leases in Toronto, two in Vancouver, and one in Burnaby, B.C. as part of its efforts to improve its balance sheet.
The five Canadian locations make up a small portion of the 69 total leases it sought permission to leave early, with most in New York.
“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” said David Tolley, chief executive of WeWork, in a release late November 6 announcing the bankruptcy filing.
The company said it would use the filing to continue to “right-size” its lease portfolio by identifying “unattractive” locations for lease renegotiation, rejection and closure both in the United States and Canada.
The leases it has specifically asked to get out of are “unnecessary and burdensome,” and exiting them would help reduce high fixed costs at vacated or underperforming locations, it said in filings.
Canadian locations include 1045 Howe St. and 1090 West Pender St. in Vancouver; 4635 Lougheed Hwy. in Burnaby and 171 East Liberty St. and 292 Adelaide St. W. in Toronto.
The company said in its announcement that it had a deal in place with the majority of its stakeholders to “drastically reduce” its debt as it works to shrink its commercial office lease portfolio.
It filed for Chapter 11 bankruptcy protection in U.S. district court in New Jersey, with plans to also file recognition proceedings in Canada under Part IV of the Companies’ Creditors Arrangement Act, it said.
WeWork locations outside of the U.S. and Canada will not be affected by the proceedings, the company said, as well as franchisees worldwide.
The company’s bankruptcy filing, making a stunning turn for a company valued at around US$47 billion in 2019, comes after its rapid expansion collided with a glut of office space following the COVID-19 pandemic.