Sonder Shares Battered On Decision To Wind Down Operations, Initiating Chapter 7 Liquidation Of US Business

• On Sunday, Marriott International said that it had terminated its licensing agreement with Sonder.
• Sonder said that 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.
• The company noted that as part of those efforts, it had engaged numerous strategic and financial parties, but ultimately was unable to execute a viable going concern transaction for its business and operations or obtain additional liquidity.

Sonder Holdings (SOND) shares tumbled 60% by Monday afternoon after the company announced that it would immediately complete winding down its operations and expects to initiate a Chapter 7 liquidation of its U.S. business, citing several challenges that have made it difficult to keep the business afloat.

Sonder stated that it has faced severe financial constraints, arising from, among other things, prolonged issues resulting from the integration of the company’s systems and booking arrangements with Marriott International.

The company said that it also intends to initiate insolvency proceedings in the international countries in which it operates.

Termination Of Agreement With Marriott International

On Sunday, Marriott International said that it had terminated its licensing agreement with Sonder. Sonder noted that 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.

Sonder also indicated that, as part of those efforts, the company had engaged numerous strategic and financial parties, but ultimately was unable to execute a viable going concern transaction for its business and operations or obtain additional liquidity.

“We are devastated to reach a point where a liquidation is the only viable path forward,” said Janice Sears, Interim Chief Executive Officer of Sonder.

“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,” he added.

Sears noted that these issues persisted and contributed to a substantial and material loss in working capital.

How Did Stocktwits Users React?

Retail sentiment on Sonder remained unchanged in the ‘neutral’ territory, with message volumes at ‘normal’ levels, according to data from Stocktwits.

Shares of Sonder have declined nearly 94% this year. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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