Co-working startup Knotel filed for chapter 11 bankruptcy on Saturday, WSJ first reported. Although CEO Amol Sarva tried to blame the company’s demise squarely on the pandemic, the company had net losses of $225 million in 2019, and lost about $49 million in the first half of 2020.
- By the numbers: By the end of Q1 2020, Knotel owed vendors $84 million. The company had a vacancy rate of over 35% in its 2.4 million-SF NYC portfolio before the pandemic.
- Saving face: Newmark Group is buying the remaining assets and will be providing roughly $20 million in debtor-in-possession financing to support day-to-day operations, the Journal reported. In August 2019, Knotel raised a $400 million funding round at a $1 billion valuation led by Wafra Inc. that included Newmark and other strategic investors.
- From a former employee: “There was a lot of shade thrown on WeWork and other competitors, but they were running the exact same business model that simply doesn’t work.” Credit Empire State Realty Trust’s Tony Malkin who refused to lease to co-working firms and was an outspoken critic from day one. [WSJ+Crain’s+BI)