WeWork is now facing an investigation from the New York Attorney General as it prepares to lay off potentially 4,000-6,000 employees in the coming weeks. The co-working company has faced major turmoil in recent months after its failed initial public offering revealed that the company was, essentially, being run into the ground by its former CEO, Adam Neumann.
The failed stock market entrance represented a major loss of trust in the IPO market, as well as an overall increase of distrust for SoftBank, the company’s biggest financial backer. Layoff’s began once Neumann was forced to leave the company a couple of months ago, but today the company’s financial trouble will impact its future even more, as thousands of job cuts are on the horizon in the very near future.
The New York Times first reported on Sunday that WeWork is looking to make extreme cuts to several of its business sectors. In WeWork’s global office spaces, as many as 2,500 employees could see their jobs cut in the coming weeks. Other offshoot businesses from within the company—like its private school program launched by Neumann’s wife, Rebekah Paltrow Neumann—will be closed as The We Company hopes to salvage its business and cut spending.
The closure WeGrow, the company’s private school, represents around 1,000 of the jobs being cut by The We Company. It was revealed recently that the company lost as much as $1.25 billion throughout quarter 3 of this year. Nearly 100 new locations cropped up in that time period, but the massive growth may have overestimated on the demand for space and resulted in excess spending with no boost to the company’s income stream.
Layoffs Attracted Attention From The New York Attorney General
Reuters reported on Monday that WeWork is reportedly under investigation by the New York Attorney General over its business practices. According to the outlet, a spokesperson for The We Company confirmed that it had been contacted by the attorney general regarding whether or not Neumann engaged in self dealing to boost his own income through the company.
This includes things like buying properties with the intention to lease them to his own business as a source of additional income, charging the company to use his trademarked word “We,” and borrowing against hisd own stake. Plus, there was that whole debacle with the private jet.
SoftBank Bails Company Out Of Major Debt
One of the few investors in the world that have opted to put faith into WeWork are sticking by the company’s side during these rough times. SoftBank, the vision fund that largely helped in over valuing the company earlier this year, has invested as much as $5 billion into the nearly-disgraced company.
The deal nearly makes the Japanese investment firm the sole owners of the We Company, a move that could prove lucrative if the company manages to come out on top. However, that seems unlikely given the near-constant wave of bad press and scandal.