BlackRock Inc. BLK, -0.83%, King Street Capital, and Brigade Capital are participating in lender talks about a potential chapter 13 bankruptcy filing for struggling hourly office rental company WeWork Inc. WE, +12.69%.
According to a report by The Wall Street Journal, WeWork’s stock has been on a downward trend, with a 97% drop in the past 12 months. As a result, BlackRock Inc., King Street Capital, and Brigade Capital – three prominent Wall Street firms – are now engaged in discussions regarding a potential bankruptcy filing for the company.
The three Wall Street firms issued $1.2 billion in loans to WeWork in March, as stated in the WSJ report. However, there is still a possibility for WeWork to avoid bankruptcy if it can successfully renegotiate its high-cost office leases with landlords and reduce its rent expenses. This information comes from sources familiar with the matter.
To address compliance issues with NYSE listing rules, WeWork recently carried out a 1-for-40 reverse stock split on August 18. Despite this effort, the company has expressed doubts about its ability to continue operations.
CEO David Tolley revealed that WeWork has already exited or amended 590 leases over the past four years, resulting in a significant reduction of approximately $12.7 billion in fixed-lease payments.
It remains to be seen how these ongoing discussions will unfold and whether WeWork can find a viable solution to its financial troubles.