WeWork has reportedly postponed thousands of layoffs because it's too broke to pay workers severance
- WeWork has delayed laying off thousands of workers, because it doesn't have enough cash to pay them severance, The Wall Street Journal reported Monday.
- 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 from SoftBank and JPMorgan on Tuesday.
- For more stories go to www.BusinessInsider.co.za.
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 laying 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 board is expected to meet Tuesday to 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-CEOs told employees in an email last week that the company planned to lay off workers in coming weeks.
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 (R693 billion) in a funding round in January. The bailouts proposed by it and JPMorgan would place the company's value at $8 billion (R117 billion) or less.
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