Affiliates of co-working company Regus Corp. have been authorized to start drawing from a $50 million bankruptcy loan made by their parent to cover rent payments to dozens of landlords as the business works to restructure office leases, WSJ Pro Bankruptcy reported. Regus has placed under chapter 11 protection more than 100 corporate affiliates that hold office leases in New York, Los Angeles, Chicago, Philadelphia, Atlanta and other cities where the coronavirus pandemic has depressed commercial-real-estate markets. The company, which provides furnished workspaces under short-term deals, hasn’t filed for bankruptcy itself. The chapter 11 filings represent a small share of Regus’s portfolio of on-demand workspace in more than 1,000 locations in the U.S. and Canada. The filings are designed to pry concessions from landlords as white-collar workers largely continue avoiding offices in major metropolitan areas. By placing the companies — created to rent and manage workspaces in particular cities — into bankruptcy protection, Regus can get out of long-term lease obligations in return for a one-time penalty. Regus might put more affiliates into chapter 11 depending on the continued impact of Covid-19 and negotiations with landlords, bankruptcy lawyer Chad Husnick said during a Tuesday hearing in the U.S. Bankruptcy Court in Wilmington, Del. At the hearing, the judge overseeing the bankruptcy cases authorized the affiliates to draw $17.5 million from a chapter 11 loan advanced by Regus. The affiliates can come back to the bankruptcy judge later to seek permission to draw the remainder of the loan, a common move in chapter 11.
