In a surprising turn of events, WeWork is reportedly gearing up to file for bankruptcy as early as next week, according to a source familiar with the matter. The SoftBank Group-backed company is grappling with a massive debt pile and substantial losses, leading to this drastic measure.

Earlier today, WeWork announced that it had reached an agreement with its creditors for a temporary postponement of debt payments. However, this grace period is quickly coming to an end, forcing the company to seriously consider bankruptcy as a viable option.

As of the end of June, WeWork had a net long-term debt of $2.9 billion, leaving the company in a financially precarious situation. Additionally, it is burdened with over $13 billion in long-term leases, making it even more challenging for the company to navigate the current economic landscape where rising borrowing costs are negatively impacting the commercial real estate sector.

This potential bankruptcy filing would mark a significant downfall for WeWork, which, back in 2019, was privately valued at an impressive $47 billion. However, investor SoftBank is likely to be hit the hardest, as it invested billions into the company, ultimately resulting in substantial losses.

WeWork's troubles initially began when its plans to go public in 2019 fell apart due to skepticism among investors. They questioned the sustainability of WeWork's business model, which involved taking long-term leases and renting out the spaces for shorter durations. Furthermore, concerns over the company's substantial losses further exacerbated investor doubts. Despite finally managing to go public in 2021, WeWork's valuation was significantly reduced, indicating ongoing challenges.

Even with the support of Japanese conglomerate SoftBank, which has invested tens of billions to support the struggling startup, WeWork has been unable to reverse its financial losses. The company continues to face an uphill battle and is now left with the possibility of bankruptcy as it attempts to find a way out of its dire financial situation.

The news of WeWork's potential bankruptcy filing has sent ripples across the industry, highlighting the pitfalls of the shared workspace model and the challenges faced by companies heavily reliant on long-term leases. Observers will closely monitor the outcome of this situation and its potential impact on the broader commercial real estate sector.