WeWork entered bankruptcy looking to reject or amend leases that were fueling billions of dollars in losses at the flexible-workspace company. But more than two months into chapter 11, WeWork remains saddled with hundreds of leases that are straining its finances, WSJ Pro Bankruptcy reported. The company has managed to reduce at least 16% or $3.7 billion of its long-term lease expenses through rejections and amendments, according to interviews with WeWork officials and its financial statements. Bankruptcy law allows companies to throw out unfavorable contracts and leases, and WeWork received court approval to reject dozens of leases since filing for bankruptcy in early November. But the company is looking to stay in many of its locations with better terms, and the threat of lease rejections has motivated landlords to come to the table to negotiate. Many landlords prefer to keep WeWork as a tenant because it would be difficult to find new ones in an office real-estate market with record-high availability rates in many metropolitan areas. But new terms have to be approved by their mortgage lenders because lower rent payments drive down property values securing the loans.
