Shared office space company WeWork filed for bankruptcy late Monday, joining a crowded list of high-profile companies to go under recently, as 2023 heads toward becoming the second-busiest year for bankruptcies in more than a decade.
WeWork filed for bankruptcy Monday, becoming the latest high-profile firm to go under.
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Key Takeaways
- WeWork’s filing for Chapter 11 bankruptcy protection put a bow on its dramatic fall from a $47 billion valuation to a below $50 million valuation, but arguably the most impactful string of bankruptcies came in the traditional banking and digital asset sectors.
- SVB Financial, parent company of the failed Silicon Valley Bank, filed for bankruptcy in March, becoming the largest company by assets to go bust since the beginning of 2022, according to Cornerstone Research, while crypto-focused Silvergate Capital officially filed for bankruptcy protection that month, also after months of limited operations due to liquidity issues.
- Silvergate’s issues were tied to a rash of failures in the crypto sector, initially set off in June and July 2022 following bankruptcies of crypto brokers Three Arrow Capital and Voyager and lenders Celsius and BlockFi.
- By far headlining last year’s flood of crypto insolvencies was the November bankruptcy of FTX, once the world’s second-largest crypto exchange, whose circumstances of collapse may land former billionaire founder Sam Bankman-Fried a multi-decade prison sentence.
- Several notable brick-and-mortar chains have also failed, including British movie theater chain and Regal Cinemas parent Cineworld (September 2022 Chapter 11 filing), Bed Bath & Beyond (April 2023), Party City (January 2023) and RiteAid (October 2023).
- Other well-known companies to go bankrupt this year with more than $1 billion in liabilities include trucking giant Yellow Corp., whose July proceedings put 30,000 drivers and other employees out of a job; regional sports television network Bally Sports operator Diamond Sports Group, whose April bankruptcy placed the broadcast rights of 42 MLB, NBA and NHL teams in jeopardy; and online dental and orthodontic provider SmileDirectClub, whose market capitalization shrank from $8.9 billion at its 2019 initial public offering to $160 million before filing for bankruptcy last month.
Big Number
516. That’s how many U.S. corporations filed for bankruptcy during 2023’s first nine months, more than 60% more than over the same stretch in 2021 and 2022, according to S&P Global Market Intelligence.
Key Background
The first three quarters of 2023 were the second-most prolific for bankruptcies since 2010, according to S&P research, narrowly behind 2020, during the height of the Covid-19 pandemic. The rise in bankruptcies came as interest rates rose dramatically, leading to far pricier loan costs and far pricier debt obligations for many companies. Still it’s hard to simply trace back many of the notable bankruptcies to high interest rates; for example, WeWork burned through about $9 billion in cash between 2019 and 2021 when the federal funds rate stood far below its current rate.
This article was first published on forbes.com and all figures are in USD.
