The situation of office real estate landlord WeWork is coming to a head. Since its launch on Wall Street, the company has lost around eight billion dollars in value. Now, the stock exchange has reacted. The New York Stock Exchange (NYSE) suspended trading of the shares of the once celebrated office space provider on Monday.

According to consistent media reports, the reason for the stock market suspension is important company news expected by the stock exchange operator. This can practically only relate to the bankruptcy filing expected since the end of last week. The company is likely to file for bankruptcy this week and seek protection under Chapter 11 of US bankruptcy laws. This would shift the focus to the continuation of the insolvent corporation.

Under the protection of U.S. bankruptcy laws, companies can safeguard themselves from creditors for a certain period of time. This could also help Wework to exit expensive office rental agreements. The New York-based rental company, which had momentarily marketed itself as a tech firm, has posted more than 16 billion dollars in losses since its inception in 2010. In the currently challenging environment for U.S. office real estate, the company has been burning through its remaining cash reserves. The situation has been continuously worsening.

As real estate corporation Boston Properties reported in an analyst call last week, Wework has recently ceased rent payments for several properties leased from Boston Properties. Wework has rented corresponding office spaces in, among other locations, Seattle, San Francisco, and New York.

The decision to suspend trading was made early Monday morning (local time). Prior to the suspension, Wework shares were trading at $1.13. They had thus increased by 35 percent in over-the-counter trading over the weekend, reducing the company's market capitalization to just $60 million.

Shortly after its IPO in autumn 2021, which was carried out using a novel stock exchange vehicle ("SPAC"), Wework was valued at over eight billion dollars. Last Wednesday, the company's stock plummeted by more than 52 percent following a media report on alleged bankruptcy plans. The company refused to officially comment on these speculations.

Wework had already become a cautionary example of vastly overrated US startups a few years ago and recently found itself in trouble again. As early as August, the company acknowledged "substantial doubts" about its survival in light of its losses and expected financial needs. On Tuesday, Wework announced that it had agreed with its creditors on an additional one-week extension for further discussions. After the company failed to transfer a due debt amount at the beginning of October, a 30-day period started, after which insolvency could be determined.

It was already reported at the end of August that a group of Wall Street firms were discussing bankruptcy. The group, which is said to include Blackrock, King Street Capital and Brigade Capital, held initial talks about the company's restructuring options. According to a media report, the funds had hinted in advance that they would support a Chapter 11 bankruptcy protection application. They had lent WeWork hundreds of millions of dollars.

The idea behind Wework is to rent office spaces with shared infrastructure to start-ups and entrepreneurs in so-called co-working spaces. Thanks to clever marketing by the founders, investors invested in Wework at a total valuation of up to 47 billion dollars. A failure of WeWork is considered by experts to be a bad omen for the US office real estate market, in which rising vacancies have been putting pressure on investors for months. Moreover, numerous stakeholders will have to refinance large mortgages in a market environment shaped by increased prime rates next year.