WeWork Inc. has recently enlisted the counsel of Kirkland & Ellis, among other legal advisers, for its bankruptcy filed late Monday in Newark, NJ. Additional advisory firms include regional law firm Cole Schotz and Toronto-based Goodmans, who are supporting WeWork on the insolvency process for its US and Canadian operations, and Munger, Tolles & Olson, who are giving external advice to a special committee of WeWork’s board.
The bankruptcy filing is a significant shift in fortune for WeWork, which was once the world’s most valuable startup, with a valuation peaking at $47 billion under its founder, Adam Neumann. It symbolizes the end of an era of commercial real estate innovation heralded by the company alongside its billionaire sponsors only a few years ago.
WeWork now plans to terminate at least 40 leases in its home city, demonstrating the impact of a pandemic-related downturn that lessened the demand for shared workspaces. Restructuring lawyers tasked with untangling the complex scenario are set to receive payment from WeWork’s bankrupt estate. However, no billing statements from these firms have been filed with the bankruptcy court yet.
Kirkland had previously counseled WeWork in March on a substantial restructuring involving its former owner, Japan’s SoftBank Group Corp., which led to a reduction of $1.5 billion in debt.
WeWork went public in 2021 combining with a special purpose acquisition vehicle. Earlier in the year, ex-top lawyer Jared DeMatteis left the company. Following DeMatteis’ departure, WeWork veteran, Pamela Swidler, was promoted to the top legal and compliance executive, who is also a signatory to WeWork’s Chapter 11 petition.
Further legal details surrounding the case are anticipated to emerge as proceedings continue to unfold.