WeWork is shuttering its Manhattan corporate headquarters and one of its largest coworking locations as the company approaches the final stages of its Chapter 11 bankruptcy proceedings. The closure affects more than 300,000 square feet across 20 floors at Tower 49 in Midtown Manhattan, a building owned by Kato International at 12 East 49th Street.

In a Monday filing in WeWork's bankruptcy case, the company's attorneys notified the court of their intention to reject the lease on May 31. The site houses both WeWork's corporate offices and a coworking space serving 2,800 members, according to a Friday filing by the company. The rejection represents one of the largest lease terminations in WeWork's portfolio.

A WeWork spokesperson acknowledged the scale of the dislocation in a statement. "Our intention is to stay in as many buildings as possible under economic terms that position all parties for a sustainable future. Unfortunately, after extensive conversations, we have been unable to reach a deal regarding our operations at Tower 49 that would enable us to successfully operate the building for the long term," the spokesperson said. "We therefore have made the very hard decision to end our operations at Tower 49 in late May."

The company will attempt to retain and relocate thousands of paying customers on whom its survival depends. "We will be reaching out to members this week to find alternative solutions and we deeply apologize for any inconvenience this may cause," WeWork's spokesperson said.

WeWork initially became a tenant at Tower 49 in July 2016 when it entered into a lease for ten floors totaling 159,000 square feet. The footprint has since grown to more than 300,000 square feet, according to court records, representing half of the building's rentable space.

At a bankruptcy hearing Monday morning, Kato International attorney Jack Rose indicated that the landlord's objections to WeWork's bankruptcy were resolved with the lease rejection. "While we regret that we will not be working with WeWork in the future, we have been able to resolve the issues with the company to our satisfaction," Rose said.

Kirkland & Ellis partner Steven Serajeddini, one of the bankruptcy attorneys representing WeWork, called the rejection of the Tower 49 lease a "tough decision." When Judge John Sherwood asked whether the closure of the headquarters would cause problems for the firm as it emerges from bankruptcy, Serajeddini responded, "The company believes they can manage through it."

The lease rejection underscores the continuing restructuring challenges facing WeWork as it works to emerge from Chapter 11 protection. The company must balance lease economics against operational viability while retaining a membership base that generates the revenue required for post-bankruptcy stability. Neither an attorney for Kato International nor a leasing agent for the building immediately responded to requests for comment.