Sonder initiates Chapter 7 liquidation

SAN FRANCISCO – One day after Marriott International terminated its licensing agreement with Sonder, the apartment-style rental hospitality company announced it will wind down its operation and initiate a Chapter 7 liquidation of its U.S. business. Sonder also intends to initiate insolvency proceedings in the international countries in which it operates.

At the same time, Sonder took a parting shot at its former partner, Marriott, stating its integration 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 Interim CEO Janice Sears added, “These issues persisted and contributed to a substantial and material loss in working capital. 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.”

In response to Sonder's comments about Marriott's alleged role in its downfall, a Marriott spokesperson told Hotel Investment Today, "Marriott is aware of Sonder’s intention of a U.S. bankruptcy filing. We have worked tirelessly to remain informed about Sonder’s financial situation and develop action plans so that we can work to meet the needs of our guests, which remains our priority. Sonder operates its properties and has made independent business decisions. Marriott does not agree with the characterizations expressed in Sonder’s release and will respond further at the appropriate time."

Late Sunday, Marriott abruptly ended its licensing agreement with Sonder Holdings Inc. initiated last year due to what it called Sonder’s default on its agreement. With the removal of ~7,700 Sonder apartment-style rooms (142 properties) from Marriott’s system, Marriott’s net rooms growth for 2025 is now expected to approach 4.5% (reduced about 45 bps).

Sonder agreed to go public in 2021 with a SPAC backed by billionaire investors Alec Gores and Dean Metropoulos and a $2.2 billion valuation in 2021. It is now reportedly valued at $6.8 million. More recently, it told the SEC it was concerned about its future.

Sonder said in its release about winding down its business 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 said it 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.