WEWORK, the co-working giant once hailed as the future of the office, formally filed for Chapter 11 bankruptcy in the US.

Softbank - which has pumped billions into Wework and remains a 60 per cent owner - announced early on Tuesday that more than nine in ten of its creditors had agreed to debt for equity swaps that it hopes will give the firm a new lease of life.

The deals will wipe out around $3bn of debt. Wework is one of London's biggest office tenants but locations outside the US and Canada will be unaffected.

Co-founded by Adam Neumann, it was the self-styled pioneer of the new flexible office movement, branding its spaces and throwing itself into the start-up and scale-up world. But the downturn in office use post-pandemic revealed that at its heart the firm was a property company. Some 74 per cent of the firm's costs went on leasing office space in the last quarter.

Chapter 11 bankruptcy allows Wework to restructure the firm.

"SoftBank will continue to act in the best long-term interests of our investors," the Japanese company said to Reuters.

The firm has been battling a substantial debt pile for quite some time and earlier this year flagged ongoing concerns and worries to investors. Founding CEO Adam Neumann stepped away in 2019 just after a planned float was pulled after scrutiny of his leadership and the firm's long-term finances.

(c) 2023 City A.M., source Newspaper