WeWork, a company focused on renting office space for startups and freelancers, has filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code, reports The New York Times. The move is part of a strategic reorganization aimed at resolving the company’s financial problems, which includes a plan agreed upon by creditors holding the majority of its secured debt. The plan includes a reduction in WeWork’s large office lease portfolio.

The company, which is trying to stabilize its operations, has requested permission to terminate leases in certain non-working premises, notifying the affected members in advance. WeWork’s bankruptcy filing revealed debts exceeding $18 billion.

In September, WeWork began to renegotiate leases and move out of certain locations, which was the first proactive step in the reorganization. The company’s global presence has slightly decreased from its peak, but WeWork still owns a significant number of office spaces in the United States. The bankruptcy proceedings will not affect WeWork franchises outside the US and Canada.

The downturn for WeWork also signifies a broader problem for landlords who relied on the company as a major tenant. The shift to remote work has led to a significant downturn in the commercial real estate market, leaving landlords with less rental income and difficulty servicing building-related debt.

WeWork’s financial difficulties have been evident for some time. Earlier this year, the company entered into an agreement with SoftBank and other banks to reduce its debt burden and obtain new financing. Despite these efforts, WeWork has recognized the uncertainty of its future operations and recently defaulted on interest payments as a strategic move to facilitate negotiations with landlords on cost-cutting.

The company’s market value has fallen sharply from its peak valuation in 2019, reflecting the rapid decline in its share price.

WeWork’s journey began with a vision to transform the workplace experience, rapidly expanding its presence around the world with the support of a significant investment from SoftBank. The company has become a symbol of the coworking movement, offering a vibrant, community-oriented work environment.

However, management problems and financial losses became apparent when WeWork attempted to go public in 2019, leading to the abandonment of the IPO and the departure of CEO Adam Neumann. SoftBank’s subsequent bailout significantly devalued the company.

Under the leadership of real estate veteran Sandeep Matrani, WeWork eventually went public through a merger with SPAC in 2021, amid a series of closures and lease renegotiations. Despite restructuring efforts, Matrani left the company, and David Tolley has since taken over as CEO, who despite the bankruptcy has expressed optimism about WeWork’s fundamental strength and future prospects.