Real-estate startup Knotel Inc. filed for chapter 11 bankruptcy for its U.S. business on Saturday, agreeing for the company to be taken over by real-estate services firm Newmark Group Inc.
Knotel said Sunday that it filed for bankruptcy to reorganize its real-estate footprint and enable the sale to go through.
The moves are the latest sign that the Covid-19 pandemic has upended the once-booming co-working industry.
New York-based Knotel, founded in 2016, raised hundreds of millions of dollars from investors. It expanded rapidly for years and was one of the more aggressive competitors in the co-working and flexible office space sector, becoming one of WeWork’s fiercest rivals.
In August 2019, Knotel said it had reached a valuation of more than $1 billion thanks to a funding round led by Wafra Inc., an affiliate of a Kuwaiti sovereign-wealth fund. But its revenue dropped significantly during the pandemic, and Knotel has faced lawsuits over unpaid rent from landlords.
“The pandemic created a uniquely challenging operating environment, with significant impacts on leasing velocity and the rate of renewals in key markets, particularly New York and San Francisco,” co-founder
said in a statement. “We must address this now to position our business