According to a story posted in the Wall Street Journal on August 24, several owners of WeWork’s secured debt totaling $1.2 billion are holding what were called “preliminary talks about the company’s restructuring options and indicated that they would support a plan for WeWork to file for chapter 11 bankruptcy.” However, the creditors who include BlackRock, King Street Capital and Brigade Capital, have not yet provided specific proposals concerning a bankruptcy or debt restructuring to WeWork, as per sources that were not identified.
What does this news mean for WeWork tenants, known as members? This is a long run prospect. Nobody knows exactly what will happen, and we are just at the start of a process that will have many twists and turns. However, let’s take a look at what might happen if a bankruptcy plan is negotiated with WeWork’s secured creditors by working through some of the alternatives if WeWork tries to reorganize as an ongoing company. To do so I consulted Eric Haber, general counsel for my firm Wharton Property Advisors who is also a bankruptcy attorney.
A Potential Bankruptcy Scenario
Under a potential bankruptcy reorganization plan,