Elon Musk’s strategy of cutting expenses at Twitter by not paying bills is coming home to roost. The company’s landlords at its iconic Market Square HQ in San Francisco have sued for two months of back rent – and more.
SRI Nine Market Square claims [PDF] that Twitter not only owes $6.8 million in unpaid December and January rent, but that it also failed to abide by the terms of its lease, which required an additional $10 million deposit into its letter of credit (LOC) if control of the lease changed.
While the lawsuit implies Twitter simply ignored requests to pay rent, Market Square said Twitter flatly refused to increase the LOC when Twitter’s lease was transferred to Elon Musk.
The suit outlines a number of attempts to get Twitter to pay its headquarters rent after being rebuffed on requests for the LOC increase, each of which ended in Twitter “not, within the time specified in the notice of default or at any other point thereafter, pay[ing] the monthly rent and additional rent due,” the suit alleges.
After drawing on the LOC to pay the entirety of the December rent and emptying it of an additional $265,515 to settle a portion of January’s bill, the suit alleges Twitter hasn’t replenished the amount withdrawn, as is also required under the lease.
After all that, Market Square said it hasn’t terminated Twitter’s right to possession of the building, and it doesn’t appear to want to either. In its prayer for relief, Market Square asks for its back rent, the $10 million addition to the LOC and other compensation – but there’s no mention of eviction.
Musk’s tactic of not paying the bills has earned Twitter several other lawsuits since he took over in October. The landlord at another of Twitter’s San Francisco offices has sued for back rent, as has the British monarchy, whose Crown Estate manages buildings in the UK, including those where Twitter resides.
Twitter has also apparently been getting into the habit of stiffing people for services rendered. Consultancy firm Charles River Associates sued the company last week, alleging it was owed $2 million.
Cash isn’t going out – is it going in?
Musk said when he purchased Twitter that the company was losing millions of dollars a day, and the decisions he made early in his tenure are unlikely to have changed that – if anything, the opposite may have happened. In the chaos of the early Twitter-under-Musk days, advertisers fled from the platform, and it’s not entirely clear if they’ve bothered to return.
Twitter has also reportedly just made its first $300 million interest payment for the $13 billion in debt Musk saddled the company with when he bought it, so the coffers are probably even emptier.
The company has apparently been pushing ahead with plans to become a payment platform, with the Financial Times reporting that Twitter has applied for regulatory licenses in multiple US states and is building out software to introduce such functionality.
Musk has talked about turning Twitter into a “super app” previously, but even that’s a fallback for the serial CEO – his very first endeavor, x.com, was founded in 1999 and is what brought him into the PayPal fold in the first place.
“Buying Twitter is an accelerant to creating X, the everything app,” Musk said in October prior to his Twitter purchase being finalized, but thus far X may be taking a backseat to keeping Twitter afloat. ®
source: The Register