The growth of flexible workspaces in the post-Covid world has been phenomenal. In Manchester alone, businesses are spoilt for choice and new Manchester offices for rent are opening up all the time.

Many of these spaces are operated by companies with an international footprint such as WeWork or Regus. There’s all sorts of jargon in the world of offices that can be confusing for businesses entering the market. When you add global workspace operators into the mix, you potentially need to know even more things that could affect you.

One example of this is Chapter 11 bankruptcy. This is an American financial mechanism which allows an indebted corporation to reorganise its assets, pay its creditors and keep trading. It’s a reasonably common practice but also a scary one. If your workspace provider declares bankruptcy, it’s normal to worry about how that will affect you.

How could it affect your if your workspace provider declares Chapter 11 bankruptcy?

For example, you’ve found a managed office space to rent in Manchester which is operated by an American company which subsequently declares Chapter 11 bankruptcy. What does that mean for you in practical terms?

We actually saw this happen in Manchester in November 2023. When WeWork filed for Chapter 11 bankruptcy, the future of its Spinningfields site was thrown into question. In turn, the future of every business resident in the building was also suddenly up in the air.

Part of a Chapter 11 declaration is the liquidation of assets to allow a company to keep trading. In the case of WeWork, they had 777 leases worldwide, including their Manchester site – a significant liability.

According to Benjamin Samuels, WeWork’s chief revenue officer, the company needed to:

·      Eliminate more than $4bn of debt

·      Slash over $8bn in total future rent liabilities

·      Secure a $450m of new capital

That plan unfortunately led to the company closing its flagship Spinningfields office in May 2024, though it continued with two other sites in Manchester at Dalton Place and St. Peter’s Square.

A WeWork spokesperson said: “As part of WeWork’s efforts to achieve a sustainable capital structure and profitable business to serve our members for the long term, we have made the decision to stop operating at No 1 Spinningfields in Manchester.

“We look forward to continuing to provide our members with flexible space solutions across our other locations in the city and the rest of the UK, which remains a key market for us.”

What should you do if your workspace provider declares Chapter 11 bankruptcy?

The first and most important step is to not panic. In a place like Manchester where office space is in such high demand, your workspace will likely find an operator again very quickly.

WeWork’s Spinningfields site is a great example. One month after the company stated that it would close the space, Cubo took over the 60,000 sqft of offices and continued operations seamlessly for businesses resident in the building.

It was the company’s second space in Manchester and added to an impressive, growing portfolio. Marc Brough, chief executive of Cubo said: “We are beyond excited to have been given the opportunity to operate out of what is one of Manchester’s best office buildings.”

“I want to reassure all existing occupiers across the three floors of the flex office space that my team will do our absolute utmost to make the transition to Cubo as simple and as hassle-free as possible, as we integrate everyone into the Cubo community.

“The new Cubo will offer an enhanced level of service to what they have come to expect from WeWork and provide access to all our workspaces across the UK.”

Secondly, if the worst comes to pass and you need to move fast, office search specialists like the Level team can help you find another space quickly and affordably.

How quickly can you rent a new office in Manchester?

We’ve got a strong track record of moving companies at short notice in tricky situations. For example, when Codurance was let down by their landlord and left homeless just before Christmas, we arranged viewings and found them a new office over the festive period so that they were ready to go again in January.

By providing initial options in just 24 hours and securing them a new home in a week between Christmas and New Year, we helped keep the company growing and made sure that problems created by their workspace provider did not end up damaging the business.

Chapter 11 bankruptcy is just one risk in the modern era where office space is provided by international companies – however, as long as you are aware of what it is and know what your options are if something goes wrong, it doesn’t have to be a huge or scary problem.

Similarly, you should make sure that you are aware of any dilapidation fees, break clauses or other legal commitments that might affect a quick move.

Want to secure the future of your company and rent flexible office space in Manchester? Get in touch with our team today to start your search.

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