Shares of WeWork (OTCMKTS:WEWKQ) stock are up by over 100% during the past five trading days. On Nov. 7, the New York Stock Exchange announced that it would begin the process of delisting the shared workspace company following its Chapter 11 bankruptcy filing in the United States. WeWork currently trades as “WEWKQ” in the over-the-counter (OTC) market.
“I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and expedite this process through the Restructuring Support Agreement,” said CEO David Tolley, who took the helm last month. “We remain committed to investing in our products, services, and world-class team of employees to support our community.”
WEWKQ Stock Trades in Volatile Fashion in OTC Market
WeWork has entered into a Restructuring Support Agreement (RSA) with its secured note shareholders, who own roughly 92% of the notes. The RSA will help the company reduce its existing funded debt and speed up the restructuring process.
WeWork has also begun the process of recognition proceedings in Canada. Shareholders should note that WeWork’s global locations and franchisees outside of the U.S. and Canada are not included in its bankruptcy filing. WeWork will continue business as normal in its active locations.
“As part of today’s filing, WeWork is requesting the ability to reject the leases of certain locations, which are largely non-operational and all affected members have received advanced notice,” said WeWork.
The company has already filed “First Day Motions” with the court to begin the bankruptcy process and believes it has the necessary capital to facilitate the process and normal day-to-day operations in the meantime. A hearing will be held on Nov. 28, while a second hearing will be held on Dec. 6.
All this news doesn’t explain how WEWKQ has doubled since filing for bankruptcy. In recent years, meme stock traders have gravitated toward companies that have filed for bankruptcy, such as Bed Bath & Beyond and Yellow (OTCMKTS:YELLQ). This phenomenon has led to an unusual surge in several bankrupt companies this year. Still, investors should note that investing in bankrupt companies is an extremely risky move that often ends in tears.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.