Twitter Sued For Not Paying Rent On Its SF Headquarters And Its London Offices
There have been a bunch of stories about how one of Elon's big cost saving" techniques was to stop paying for basically anything, including rent.
To cut costs, Twitter has not paid rent for its San Francisco headquarters or any of its global offices for weeks, three people close to the company said. Twitter has also refused to pay a $197,725 bill for private charter flights made the week of Mr. Musk's takeover, according to a copy of a lawsuit filed in New Hampshire District Court and obtained by The New York Times.
A few weeks ago, we noted a lawsuit over unpaid rent in San Francisco, but, it was not for the company's famous Market Street headquarters. But, I guess that's changed now. The landlord for Twitter's headquarters, SRI Nine Market Square, has now gone to court to demand that Musk pay up. Interestingly, the lawsuit reveals that there was a clause in their lease that if there was a change in control of Twitter, the company was required to increase a letter of credit as a security deposit by $10 million. Guess what didn't happen:
On or about November 22, 2022, Plaintiff served Defendant with a demand toincrease the LOC by $10,000,000 pursuant to Paragraphs 13 and 25 of the Lease. A trueand correct copy of such demand is attached hereto as Exhibit 2 and incorporated herein bythis reference. Defendant did not, within the time specified in the notice, or at any othertime thereafter, increase the LOC by $10,000,000. Rather, Defendant contended, inresponse to Plaintiff's notice, that it was not required to increase the LOC by $10,000,000upon a transfer in control of Defendant under the terms of the Lease.
But, that's the least of the issues, because Musk just isn't paying rent:
Defendant failed to pay monthly rent and additional rent due under the Leasefor the month of December 2022 in the approximate sum of $3,363,815.29.
On or about December 5, 2022, Plaintiff served Defendant with a notice ofdefault under Paragraph 25 of the Lease regarding Defendant's failure to pay monthly rentand additional rent due for the month of December 2022. Defendant did not, within the timespecified in the notice of default or at any other point thereafter, pay the monthly rent andadditional rent due under the Lease for the month of December 2022. As a result, an Eventof Default occurred because of Defendant's failure to pay monthly rent and additional rentfor the month of December 2022.
Given the lack of payment, the landlord said it was drawing down the amount from the existing letter of credit security deposit (which it was asking to raise). The existing amount basically covered the one month of rent, leaving basically nothing left as a security deposit. The landlord then demanded that Twitter replenish the amount it drew down. Not surprisingly... Twitter appears to have ignored it. When another month went without receiving any payment, the landlord took the remaining bit of money that was left on the credit, and again demanded that Twitter replenish the account and pay its rent.
It appears that the delay in filing this suit was until the entire security deposit had been drawn down.
The lawsuit is now for both the failure to pay the rent, constituting a breach of the lease, and an order forcing Twitter to increase the letter of credit for the security deposit by $10 million, as was required on change of control in the lease.
And... that's not all.
Over in London, Twitter apparently leases its offices from The Crown Estate, which is a private organization, but with a historical tie to the royal family's real estate holdings. And... it has now also filed a lawsuit against the company for failing to pay its rent.
Meanwhile, people keep telling me that Musk has made Twitter profitable again." If that's true, why isn't he paying the damn rent? Anyone can be profitable" if they just stop paying all their bills.