Hospitality company Sonder has officially filed for bankruptcy following the collapse of its partnership with hotel giant Marriott International.
The San Francisco firm, which operated thousands of short-term rental units, including apartment-style and boutique hotel accommodations around the globe, filed for Chapter 7 liquidation proceedings in federal bankruptcy court in Delaware on Friday.
In a legal filing, Sonder listed its estimated assets as between $1 billion and $10 billion and its estimated liabilities as between $1 billion and $10 billion.
Sonder announced its bankruptcy plans on Monday, saying it would immediately wind down its US operations. The day before, Marriott had announced an abrupt end to its licensing agreement with the company — a move that sparked chaos and confusion for blindsided guests.
As Business Insider has reported, many guests were forced to leave their accommodations with little notice the day of Marriott's announcement.
Sonder's bankruptcy filing said Marriott terminated its licensing agreement with the company on November 7, two days prior to the hotel chain's announcement.
Friday's bankruptcy petition said the company has between 5,001 and 10,000 creditors. It didn't list dollar amounts owed, but included a matrix of creditors representing individuals and companies from Italy to Canada, including those in the security services and software sectors.
In announcing its plans to file for Chapter 7, Sonder also said it would "initiate insolvency proceedings" in other countries where it operates.
Sonder, a firm once valued at over $1 billion, said it "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."
The short-term rental company 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 was "unable to execute a viable going concern transaction for its business and operations or obtain additional liquidity."
Friday's filing suggested the process started in September when Sonder formed a special board committee to explore strategic options. By October, the company and its advisors were engaged in a deal to sell assets and secure a type of financing that would have allowed it to continue operating while restructuring debt. On November 2, those negotiations abruptly collapsed as the "lender/purchaser suddenly and unexpectedly" withdrew from negotiations, the filing said.
On November 6, Sonder secured what it called "incremential financing" from Marriott to fund "critical short-term obligations."
In addition to managing properties, Sonder — which launched in 2014 — also offered travelers an online platform to book stays at those properties.
Marriott signed its long-term licensing agreement with Sonder in August 2024, prompting Sonder to rebrand as Sonder by Marriott Bonvoy.
The deal allowed Marriott Bonvoy members to book Sonder stays directly through the hotel giant's platforms.
On Sunday, the hotel chain announced that the agreement had been terminated due to "Sonder's default."
"As a result, Sonder is no longer affiliated with Marriott Bonvoy, and Sonder properties are not available for new bookings on Marriott's channels," Marriott said.
This led to the cancellation of travellers' current reservations and future bookings.
Sonder's cofounder, Francis Davidson, told Business Insider this week that he was stunned by the downfall of the company that he launched as a college student.
"I've poured my heart and soul into building this company, starting as a college student in 2014 and through the pandemic," said Davidson.
"We all felt good about the positive momentum we were seeing in June when I left, and so to then see that the business has now run into a brick wall, it's just shocking to me," he said.
