Apartment-style accommodations provider Sonder Holdings is winding down operations and preparing to file for Chapter 7 bankruptcy and liquidate its holdings, the company announced Monday.
The announcement comes one day after Marriott International terminated its licensing agreement with Sonder and removed all Sonder inventory from its distribution channels.
Sonder in a Monday statement said it had "faced severe financial constraints arising from, among other things, prolonged challenges in the integration of the Company’s systems and booking arrangements with Marriott International."
Sonder said it "made comprehensive efforts to evaluate all financing and other strategic alternatives, including a sale of its business and operations, to improve its financial condition," but "ultimately was unable to execute a viable going concern transaction for its business and operations or obtain additional liquidity."
Sonder's financial position in recent years was challenged by high costs and debt. The company in the years following its 2022 deal with a special purpose acquisition company to go public had experienced delayed financial filings and layoffs, and in multiple filings with the U.S. Securities and Exchange Commission acknowledged its "substantial doubt" about its ability to remain a going concern.
Still, the would-be 20-year deal with Marriott offered Sonder something of a lifeline in $15 million in key money as well as the opportunity to list its inventory in Marriott's distribution channels. That, however, ended Sunday after what Marriott called Sonder's "default."
“We are devastated to reach a point where a liquidation is the only viable path forward,” said Sonder interim CEO Janice Sears said in a statement. "Unfortunately, our integration with Marriott International was substantially delayed due to unexpected challenges in aligning our technology frameworks, resulting in significant, unanticipated integration costs, as well as a sharp decline in revenue arising from Sonder’s participation in Marriott’s Bonvoy reservation system."
Sonder's full inventory became bookable though Marriott's channels in June, 10 months after the deal was announced.
"These issues persisted and contributed to a substantial and material loss in working capital," Sears continued. "We explored all viable alternatives to avoid this outcome, but we are left with no choice other than to proceed with an immediate wind-down of our operations and liquidation of our assets."
Sonder said in addition to the Chapter 7 process it would initiate insolvency proceedings in the "international countries in which it operates." Sonder operates in 37 cities in nine countries, it said, and would provide further information on the wind-down "in due course."
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