Yesterday, we announced that we have filed for Chapter 11 bankruptcy due to our failed restructuring plan. As part of this plan, we were supposed to swap $3 billion in debt for equity.
However, despite our efforts, we were unable to make our business model work. Our strategy of holding onto long-term leases and converting them into short-term rentals proved to be too risky, especially in a time of low interest rates and high rental prices. Over the years, we have experienced both success and failure. Our valuation has fluctuated, and many investors, including Benchmark, JP Morgan, and SoftBank, have shown interest in our company. However, as we focused on growth, the issue of cash burn was ignored until it became impossible to ignore.
The IPO filing was a disaster, and the pandemic further worsened our situation. The office market also played a significant role in our downfall. Despite our struggles, we were able to go public in 2020 with a valuation of less than $3 billion, which later increased to $9 billion. Unfortunately, this increase in value ultimately led to the loss of wealth for our investors, both institutional and individual. Moving forward, we will continue to operate while negotiating repayment terms with our creditors.
A tentative restructuring deal has been reached, which will eliminate over $3 billion in debt and significantly reduce our share value. Our founder, Adam Newman, released a statement expressing his belief that a reorganization can lead to a successful emergence for WeWork.
This statement suggests that our story may not be over just yet..