Cannot understand how they can restructure this. Even one new building in London which isn't anywhere near structurally complete WeWork has taken 18 floors on a 25 year lease (I think due to open 2020 or 2021).
Is there a way they can walk away from all these commitments? I understand they have a SPE structure which potentially allows them to do that, but I imagine there must be some costs or downsides to it, otherwise it isn't much of a lease commitment from WeWork's PoV.
Pay whatever cost is in the lease in order to break it or go bankrupt and pay out creditors first. The building management will then either find a new tenant and/or enforce other components of the lease and sue for their money per the contract agreement.
I had also thought that they had set up some leases through their own legal structures so they could limit some of WeWork's financial liability from the lease.
The leases through the special purpose entities are still (supposedly) guaranteed by parent WeWork. To shed the leases would require wiping out some component of the equity through bankruptcy.
Bankruptcy is a different story than a company just deciding, "Nope, we don't want the lease anymore". And most restaurants are structured as an LLC and owned by the parent corporation (or just independently owned by individuals) who can shut down the business and not be on the hook for any debts that were not secured with a personal guarantee.
Then unless the LLC's operated on credit secured by a WeWork guarantee, if the LLC dissolves then WeWork probably couldn't be sued for the broken lease. However I'm not a lawyer, much less one specializing in LLC liabilities etc.
I’d guess, given the diversity of commercial RE counter parties that the WeWork hydra is negotiating with, at least a good portion would’ve priced-in a premium for early termination.
Is there a way they can walk away from all these commitments? I understand they have a SPE structure which potentially allows them to do that, but I imagine there must be some costs or downsides to it, otherwise it isn't much of a lease commitment from WeWork's PoV.