Knotel cofounder Edward Shenderovich is stepping back from his position as chairman, he told staff in a Tuesday night email obtained by Insider.
Shenderovich indicated he plans to return to the flexible workspace provider, which filed for Chapter 11 bankruptcy on Sunday.
Cofounder Amol Sarva, who has long served as CEO, "will wear both hats for now," Shenderovich wrote.
"Just to be clear, I am not abandoning the ship – I hope to be back after the Chapter 11 process concludes. Just stepping out for a while," he said, not indicating his short-term plans in the email.
Other Shenderovich ventures include London-based Kite Ventures, a venture capital firm he founded in 2008. The firm's 30-company portfolio included Groupon, Delivery Hero, and Plated, per Pitchbook. Shenderovich also founded two companies.
Shenderovich, a Russian-born entrepreneur, was largely responsible for Knotel's fundraising, while Sarva served as the face of the company and focused on operations.
Knotel said it raised $400 million in a Series C fundraising round in August of 2019. Sarva implied a valuation of at least $1.3 billion at the time in a Bloomberg interview. Of that round, $250 million was set aside for buying buildings on behalf of lead investor Wafra, an effort that never materialized, according to sources with knowledge of the company's finances.
More recently, Knotel struggled to raise additional capital. Sarva told staff in July he raised $10 million and sought to bring in $100 million by the end of August, an effort that never materialized. At the beginning of January, he said he secured funding, which an insider said was a restructuring deal involving debt and equity components.
A Knotel spokesman did not respond to an immediate request for comment.
Knotel, once one of the brightest and most valuable names in an ascendant industry, filed under seal for Chapter 11 reorganization in US Bankruptcy Court in the District of Delaware, following in the recent footsteps of other flex-office companies. The startup said it plans to sell its business to the publicly-traded real-estate services company Newmark, one of its largest creditors.
For months, Knotel has been hit with dozens of lawsuits in several states by landlords and creditors, who claim the firm owes millions of dollars in unpaid rent and other debts, some of which precede the pandemic. With mounting financial liabilities, the company had been planning to dramatically scale back its business.
The company's deteriorating financial position appeared to quicken in recent weeks. At least eight Manhattan landlords sued Knotel in January on claims of unpaid rent at several locations, according to court records. Last week, Knotel gave notice to a member that it planned to vacate a workspace it operated at 200 West 41st Street, according to a source with direct knowledge of those communications, leaving that customer to scramble to retrieve their belongings from the location before it was padlocked.