WeWork Warns of Bankruptcy Risk, and Analysts Claim It Will Have a Ripple Effect on the Commercial Real Estate Industry
WeWork recently declared that “substantial doubt exists” about its ability to continue as a “going concern” and is at risk of bankruptcy. Analysts warn that not only can WeWork’s bankruptcy or collapse directly impact all its landlords, lenders and members, but it can also have a wide ripple effect on the commercial real estate industry. That is because WeWork is a major office coworking tenant in New York City, and its lease payments back billions of dollars of property loans and commercial mortgage-backed securities.
EU Bankruptcies Highest Since 2015
A recent study showed bankruptcies and insolvencies in Europe to be at the highest level since 2015, with bankruptcies in the U.S. having already increased 10% since June 2023.
How to Protect Yourself
R&E frequently represents landlords, lenders and other parties in such major retail bankruptcies, as well as middle market size bankruptcies across various industries, to assess their risks and rights and to formulate strategies for recovery and liquidity concerns, including how best to access and apply security deposits or letters of credit, as well as other businesses concerned about the present and potential future impact of the unique challenges faced in the current economic climate. Accordingly, now would be a good time for you to conduct a review of any contract, loan and/or security agreements with any potentially troubled counterparties. Feel free to contact your trusted R&E attorney or John D. Giampolo, Member & Head of the firm’s Bankruptcy & Reorganization Department, to assess your risks and rights, to assist with any lease review and to formulate strategies to best serve you.