Knotel Files for Chapter 11 With Plans to be Acquired by Newmark
The pandemic had a significant impact on the company.
Flex space provider Knotel and its US subsidiaries have filed for bankruptcy relief under Chapter 11, with plans to be acquired by an affiliate of Newmark Group. It also plans to exit multiple locations in the US.
The company also filed a motion requesting approval of a stalking horse asset purchase agreement with Newmark.
An affiliate of Newmark has given Knotel a $20 million commitment for debtor-in-possession financing that is subject to court approval. Knotel believes the financing is enough to support its day-to-day operations during the process, including paying employee wages and benefits, as well as working with customers and vendors.
The pandemic had a significant impact on the company, according to CEO and co-founder Amol Sarva. “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,” he said in prepared remarks.
Co-working, like the larger office asset class, suffered significant setbacks during the pandemic with ASB Real Estate Investments calling it the most at-risk segment in the office sector. “Any longer-term contraction in coworking catalyzed by the pandemic could further disrupt certain office markets [particularly New York City], which had become dependent on growth in this space,” it said.