- WeWorkhas delayed laying off thousands of workers, because it doesn’t have enough cash to pay them severance,The Wall Street Journal reportedMonday.
- The company reportedly could run out of cash by next month unless it gets new funding, and was planning on cutting jobs to save money.
- How the company will handle severance has been a hot topic of conversation, and employees are particularly concerned about the WeWork shares they hold.
- WeWork’s board expected to review funding offers fromSoftBank (and JPMorganon Tuesday.
- Read all of Business Insider’s WeWork coverage here.
WeWork, it seems, is in a bit of a Catch 22
With money running short after a failed initial public offering, WeWork has been planning on lay ing off thousands of employees. There’s only one problem – it’s so short on cash that it doesn’t have enough money to pay severance to affected workers,according to The Wall Street Journal’s Liz Hoffman and Maureen Farrell.
So, WeWork, which reportedly will run out of cash within a month if it doesn’t get a new financing deal, has postponed the layoffs, The Journal reported Monday.
A WeWork representative did not respond to an email seeking comment.
The delay could be short term . WeWork’s boardis expected to meet Tuesdayto consider new funding offers from SoftBank and JPMorgan. Both deals would involve propping up the struggling company with billions of new dollars in additional cash.
WeWork’s new co-CEOstold employees in an email last weekthat the company planned to lay off workers in coming weeks.
Read this:WeWork CEOs tell staff layoffs are coming in leaked email ahead of decision on rescue package
As reports of imminent layoffs have swirled, severance packages have been a hot topic of conversation inside WeWork. Workers have peppered management with questions around it recently, and have focused particularly on what will happen with their outstanding shares in the company, one person familiar with the matter told Business Insider. Employees have also been asking whether their severance package will take into account any stock they are owed.
Many employees were paid partially in shares. Others received WeWork shares when the company acquired their startups. In many cases the shares they received carried a much higher value then than they do now.
SoftBank valued WeWork at $ 47 billion in a funding round in January. The bailouts proposed by it and JPMorgan would place the company’s value at $ 8 billion or less.
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- Read more about WeWork:
- SoftBank is planning on paying Adam Neumann $ 200 million to step aside if it takes over WeWork
- WeWork used massive discounts – in some cases, essentially giving away space for 2 years – to try to poach customers from rivals
- WeWork could face a cash crunch as soon as February. Industry watchers think SoftBank, its lenders, and the entire industry has too much at stake to let it go under.
- Even after ousting Adam Neumann as CEO, WeWork could still go public this year – if it prices its IPO low enough
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