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Twitter Sued for Nonpayment of Rent on San Francisco Office
- romellem 4y agoIs the calculation just that the cost of litigation will be less than the full contract lease? I don’t understand how that could work.
- cozzyd 4y agoMusk probably fired the guy in charge of paying rent
- barbazoo 4y agoSimplest explanation, probably right.
- hef19898 4y agoThat person was totally unproductive anyway. Just image, they barely wrote a single line of code!
- saalweachter 4y agoIf you fire everyone who knows how to cut a check, your outflows will reduce dramatically.
- dekhn 4y agoWell, at least in the short term...
- 93po 4y agoIt's cool that HN just turns into baseless speculation around Elon now
- kingofpandora 4y agoI wouldn't call it baseless ...
- kibwen 4y agoIndubitably, this speculation is based.
- deleted 4y ago[deleted]
- naveen99 4y agoTwitter could just declare bankruptcy and restructure.
- tonystubblebine 4y agoI agree this is where things are headed. Is it a sure thing that Elon maintains control in a restructuring?
- nostrademons 4y agoUsually not. Typically in a bankruptcy the debtholders become the new shareholders and then replace existing management with ones more friendly to their interests.
- hn_go_brrrrr 4y agoAt which point Musk wouldn't own Twitter anymore, like he wanted. It sounds crazy, but is this his exit strategy?
- mikro2nd 4y agoHow does he recover 44B this way?
- Retric 4y agoHe “recovers” the value of the loans he defaults on, which could easily be worth more than Twitter at this point.
- raverbashing 4y agoI dunno, I can think of cooler ways of disposing 44bi $, preferably in a non-reputation damaging way
- mschuster91 4y agoBreaking apart Twitter would certainly be in the interest of Saudi-Murderabia. For the Saudis, their loan amount is petty change, and they get to destabilize the main driving force behind all major political unrest in the Arabic region and the best and most efficient way to share and spread documentation of government-committed crimes also vanishes.
- nostrademons 4y agoLitigation takes years to play out, paying the lease would result in bankruptcy imminently. Plan is to live another day, long enough to stabilize finances, and then unload it on the public markets where the litigation becomes somebody else's problem.
- jsnell 4y agoThis is Musk stiffing a supplier for $100k. That seems unlikely to make their bankruptcy any more imminent. But it does signal (on the record, not just rumours) to literally anybody that Twitter is doing business with that they are distressed, and should be extended no credit. Payment up front, or no service.
- IG_Semmelweiss 4y agoSeems a reasonable for a service company with no inputs to COGS that are on credit terms. Payroll is not on credit, and most infra is metal, or on some VP's CC, anyway. The reasonable signal is yes indeed for Twitter vendors, if you are opex and a long contract, be ready to have our lawyers sit down and hash it out.
- HarryHirsch 4y agoit does signal ... that Twitter ... are distressed Disagree - this is automobile industry tactics where you pay your suppliers late and short because they have no choice. Musk is negotiating for lower rent.
- phpisthebest 4y agoYep... Ford, GM, and the rest have played that game for years, including just telling suppliers they are now going to pay less for parts.... and since the suppliers have built their business around that one contract there is not much they can do about
- basketdryer 4y ago> they have no choice A commercial landlord in downtown SF has many, many choices. The power imbalance here is not even remotely close to the one given in your analogy.
- redtexture 4y agoCreditors can force a company into involuntary bankruptcy proceedings. Bankruptcy and leases survey: https://www.jdsupra.com/legalnews/what-to-do-when-commercial-leases-end-32005/ https://www.jdsupra.com/legalnews/what-to-do-when-commercial...
- mschuster91 4y agoI have no idea about the contracts, but I could imagine a scenario where Twitter signed a 10 year lease that's expiring in five years or more, and Musk believes / hopes that being enough of an arsehole will lead the landlords to just dropping the contracts instead of risking a multi-year court battle - even if the landlords would eventually win the lawsuit, it will be a risk on their balance the whole time, whereas Musk doesn't have to answer anyone but his creditors about the lawsuit risk.
- zamalek 4y agoLuckily they don't need an office with their great remote work policy. Oh... wait.
- Someone 4y agoTheir policies aren’t exactly written in stone. Yes, on November 11, it was (https://apnews.com/article/elon-musk-twitter-inc-technology-business-0d3d4618a3f4631dfd253ae8798c5196 https://apnews.com/article/elon-musk-twitter-inc-technology-...) “an email to employees from Musk on Wednesday night ordering workers to stop working from home and show up in the office Thursday morning”, but that was ages ago. Last week, we got (https://nypost.com/2022/12/30/twitter-closing-seattle-office-employees-will-work-from-home-reports/ https://nypost.com/2022/12/30/twitter-closing-seattle-office...): “Twitter is closing down its Seattle offices and telling employees to work from home”
- rhaway84773 4y ago> but that was ages ago I’m not sure if this is really well done sarcasm, but the original article is less than 2 months old.
- Sakos 4y agoWith the speed at which Elon changes his mind, I think "ages ago" is accurate even if it was less than 2 months ago.
- dragonwriter 4y agoIts not unreasonable if it was 2 hours ago.
- api 4y agoDidn't they do that trick of pretending to end remote work to make people resign so they don't have to pay severance?
- 4y ago
- mathattack 4y agoMany companies did this during the pandemic- landlords don’t have strong rights.
- GavinMcG 4y agoWhat would "strong rights" look like? They can pursue violations of contracts, as this landlord is doing.
- mikequinlan 4y agoI think 'strong rights' would be the right to quickly forcibly evict a non-paying renter.
- jeffbee 4y agoCommercial landlords have all the rights they need in that regard. It’s a contract dispute and a court will order remedies like any other contract dispute. You don’t want to give landlords unilateral powers to interpret and enforce contracts. That would be pretty dumb.
- raverbashing 4y agoResidential tenants have many more rights than commercial ones Though for a delay of 15 days nobody will be getting the trucks ready yet
- goodpoint 4y agoLandlords have very strong rights. They can get tenants evicted through legal means.
- dboreham 4y agoThey don't need to evict: they can lock the doors and turn power off to all computers.
- 4y ago
- MrMan 4y agoit should be easy to recapitalize Twitter using sales of Tesla stock, so I cant believe its an actual shortage of cash. Probably trying to game the litigation cycle and pay at the very last minute? But to what end, it seems like a doomed game to play, you either have money coming in or you dont.
- TigeriusKirk 4y agoWith a fraction of the people, they must only need a fraction of the space. Maybe it's some tactic to renegotiate the lease? Though that seems unlikely to work out.
- starkd 4y agoHe's very likely to move Twitter HQ to Texas, like he did with Tesla. It would actually be to his advantage.
- kibwen 4y agoTesla stock is down 69% (yes, really) over the past 12 months, and part of what's triggering the price collapse is Musk's own sell-off. When a CEO divests from their company, markets historically do not react with confidence. The more Elon Musk sells, the less value he has and the more stock he'll have to sell the next time that he wants to leverage his wealth to buy something pointless.
- vlovich123 4y agoBezos is selling off tens of billions of Amazon stock a year. Amazon stock doesn’t seem to be reacting to it. I don’t think the market reacted so much to Musk vs the fact that Tesla selling prices have plummeted because it turns out they’ve saturated their market (but until then people believed in the hockey stick growth). It was obviously ridiculous because secondary market sales higher than direct sales cannot be sustained for very long (it indicates you can’t meet supply, but there’s obviously not an infinite amount of supply at the higher price point). That + the collapse of most stocks would account for most of the drop I think. There’s possibly some amount of knock on effect of Musk’s advertised Twitter problems creating a PR problem for him in terms of can he focus on Tesla, Twitter and SpaceX properly. There’s only so many drugs you can take to help you with that.
- d-jones 4y ago"Twitter, which doesn’t have a media department, didn’t respond to a request for comment."
- starkd 4y agoTwitter is their media department.
- IntelMiner 4y agoJust @ Elon. I'm sure he's got a "banger" reply ready to go
- deleted 4y ago[deleted]
- ilyt 4y agoI respect author's self control to add "anymore" to that sentence.
- bunnyfoofoo 4y agohttps://archive.ph/78H1W https://archive.ph/78H1W
- eganist 4y agoAlternate URL (still bloomberg, via yahoo): https://www.yahoo.com/now/twitter-sued-nonpayment-rent-san-032811999.html https://www.yahoo.com/now/twitter-sued-nonpayment-rent-san-0... > Read more: Twitter’s Skipped Lease Payments Hit Bonds Tied to Headquarters the Read More link (still bloomberg, via yahoo): https://news.yahoo.com/twitters-cost-cutting-efforts-hitting-200015748.html https://news.yahoo.com/twitters-cost-cutting-efforts-hitting...
- whiddershins 4y agoNone of this is as interesting as most people seem to think. Businesses do lots of stuff to negotiate and renegotiate and bully / squeeze / etc. each other. It will likely be worked out without the lawsuit actually making its way through the court system.
- Bilal_io 4y agoThe case doesn't need to be interesting to warrant highlighting. Musk is the person of interest here. Also, lawsuits are usually a method to force the other party to sit and talk. As an example, Texas law requires mediation before being able to see a judge, including things like divorce. I've heard that between 70% to 80% of cases get settled in mediation (not sure if this statistic is specific to Texas or not)
- jeffbee 4y agoI don’t know why anyone would think otherwise, but a mediator will simply advise Twitter that they are required to pay the rent. There isn’t a negotiating tactic here that would actually work. A court would order them to pay and damage and costs and fees too. Short of bankruptcy Twitter or any organization is required to perform their end of contracts.
- starkd 4y ago[flagged]
- jeffbee 4y agoThis dispute isn't about their HQ, it's about some random office space elsewhere. And I don't see how moving an organization's titular headquarters has the effect of abrogating a commercial lease.
- basketdryer 4y ago> Musk can easily move the HQ out of California And a commercial landlord in downtown SF can just as easily find another tenant to fill the space. Playing hardball requires the other side to actually give a shit if you walk away from the table: Finding another tenant might be a hassle for the landlord, but certainly no more of one (and very likely much less of one) than Twitter moving the company HQ would be.
- xqcgrek2 4y agoSeems HN is does not have expertise in this and who holds the cards in the current market in SF. The lease previously negotiated by the past regime has little relevance as Twitter is currently occupying less than 50% of the floor space. The landlord has to either accept lower payment, or look for a new tenant and Twitter moves to Austin. Given the current environment in SF, it's likely a new tenant won't be found for years.
- salawat 4y agoThat's cool. That doesn't excuse squatting, and a good faith effort requires reconvening at the negotiating table to formulate new terms; not just ghosting and coasting until the landlord engages in litigation, or holding somebody else over a barrel.
- skippyboxedhero 4y agoIn my experience, that is almost never how it works. Landlords have to take a hard line. They negotiate with a tenant and then the whole building stops paying rent the next week. The same thing is happening in retail as offices. Rents are, mostly, way higher than the market and landlords are quite happy for that to continue. Eventually the market is going to crack, I think everyone has acknowledged that...but landlords aren't going to be the ones to crack it themselves.
- jeffbee 4y agoWhat a completely bizarre interpretation of contract law. Lessors may be in a bind after the lease expires, but during the term of the lease they are entitled to its terms. Nobody can simply stop performing the terms of a lease, outside of bankruptcy.
- recuter 4y agoSometimes to get out of the lease you break the contract. This contingency and associated penalties are often clearly specified in the contract. That being said, I would bet the article is just lazy journalists trolling for clicks as usual.
- joegahona 4y ago> Twitter hasn’t paid rent on its headquarters, or any of its other global offices, in weeks, the New York Times reported on Dec. 13. Isn’t rent paid once per month? When I was a renter, this could’ve been said about me literally every month, once two weeks had elapsed between payments.
- gdpr2022ap 4y ago[dead]
- deleted 4y ago[deleted]
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- phpisthebest 4y ago[flagged]
- autophagian 4y agoIt likely means that the rent payment is overdue by weeks.
- deleted 4y ago[deleted]
- redtexture 4y agoCommercial leases specify payments and default deadlines.
- rsfern 4y agoAccording to the landlord Twitter is supposed to have been “in default” on their lease as of Dec 21. It’s like the second sentence of the Bloomberg article we’re commenting on, before the subscription fold.
- phpisthebest 4y agoI would be interested in knowing how many other tenants this landlord has chosen to file suit on when the tenant is 7 days over due (in default in 21st, filed the suit on the 29th)? Seem very aggressive. I wonder if politics has any bearing on their choice to file? Or the fact that Elon has publicly been considering closing the SanFran HQ?
- pipeline_peak 4y ago> Refusing to provide toilet paper or pay rent, but employees can’t work remotely. Why do people worship this clown again?
- 93po 4y ago[flagged]
- danans 4y agoIt used to be his fostering of the market for luxury EVs and reusable space rockets. Now it's mostly for being the world's richest and most powerful troll, who despite his extremely privileged status still mostly punches down.
- lawn 4y agoThat's always a riddle for outsiders when looking at a cult of personality.
- rchaud 4y agoHe's kryptonite for entire swathes of the nerd demographic. 1) The Dawkins-pilled atheist who subconsciously misses the messianic words of charismatic preachers 2) The well-to-do Burning Man hippie that remembers Exxon Valdez and Gulf of Mexico BP oil spill and has sworn off ICE vehicles. These ones are most likely jumping ship these days, unless they belong to... 3) The "objective rationalist" who prefers facts to feelings, dislikes political correctness and leftist hysteria and thereby appreciates Musk's thoroughly unemotional and carefully considered public statements about Nancy Pelosi and the woke mind virus.
- krapp 4y agoYou're not wrong but kryptonite would be repelling them not drawing them in, which I think is what you mean.
- chasing 4y agoReputation matters.
- gorbachev 4y agoI wonder if any commercial real estate company would rent Twitter anything at this point. It's pretty clear Musk intends to save money by f*cking others. Might as well go 100% remote.
- phpisthebest 4y agoThey will in Texas, FL, or TN which is most likely where the company will be moved to
- woodruffw 4y agoIt’s probably optimistic to assume that whatever engineers are left at Twitter will willingly relocate to Tennessee. Unless you mean that he’ll gut the company entirely and start anew in one of those states?
- nunez 4y agoThere are a lot of great engineers in TN who would gladly work at Twitter while getting that SFBA paycheck Actually Twitter moving to Nashville or Memphis could be the greatest thing to happen to these cities (Memphis more than TN)...if they make it
- woodruffw 4y agoI agree that plenty of devs in TN would happily take an SFBA paycheck without moving. But why in the world would any company, much less Musk’s Twitter, offer such a massively out of band salary? The entire point of moving to states like TN is to pay less for developers, not the same amount.
- deleted 4y ago
- jmyeet 4y agoSome claim Twitter is attempting to renegotiate. That may well be true. But this doesn't fit in well with the greater narrative. Since Elon's takeover of Twitter, it's been one PR disaster after the next. Mass layoffs, begging people to come back, cutting remote work, cutting in-office catering, the whole Twitter Blue debacle, unbanning some of the worst, the drop of advertising spend on Twitter (which, at least in part, is somewhat explained by the general market but part of it isn't), trying to fire the previous executives for cause to avoid golden parachutes, arguably not paying promised severance, Elon's controversial politics going front-and-center, the list goes on. Reputation matters. Not paying rent fits into the broader narrative that Twitter is desperately cutting costs and is haemorrhaging money. Elon's Tesla stock sales fit this too. How do you attract and retain talent when people aren't sure about the company's future or they see how easily Elon discards staff? Even in today's market, companies have to work to hire and retain good staff. And they can't completely rely on work visa indentured servitude, as much as they seem to be trying.
- starkd 4y agoThey had to cut costs to keep away from the "fast lane to bankruptcy". When not pulling in enough revenue, you have to act quickly. https://youtu.be/HE5CTKqWEV0?t=3570 https://youtu.be/HE5CTKqWEV0?t=3570 Wasn't twitter supposed to stop working by now? They are still functioning, despite the layoffs. Maybe it worked?
- bigbillheck 4y agoThey had a major outage a few days ago, and I see a steady stream of reports from people of little things not working.
- nrp 4y agoIt’s not made obvious by the article, but this lawsuit is for non-payment on a lease of one floor of 650 California St, not for non-payment on the 1355 Market St headquarters. They are also not paying rent at the latter, so presumably another lawsuit is coming. My assumption though is that they have already vacated the now extraneous space at 650 California and will settle with the landlord to break the lease.
- rubyist5eva 4y ago[flagged]
- dragonwriter 4y agoNot the only, or biggest, nonpayment lawsuit they are facing: https://www.sfchronicle.com/bayarea/article/Bay-Area-software-company-sues-Twitter-for-breach-17660241.php https://www.sfchronicle.com/bayarea/article/Bay-Area-softwar...
- nervlord 4y ago[dead]
- rchaud 4y agoThe article references the NYT as reporting they're not paying rent anywhere: > Twitter hasn’t paid rent on its headquarters, or any of its other global offices, in weeks, the New York Times reported on Dec. 13.
- jacooper 4y agoUse this simple trick to immediately lower your companie's cost!
- rchaud 4y agoI kid you not, there is a Dilbert strip that is effectively the pointy-haired boss saying "In an effort to streamline operations and cut costs, we've decided to start stealing stuff". I'm paraphrasing, but it really was a one-liner like that.
- drc37 4y agoMy biggest question is: who cares? Lot’s of people in this community (and the media) love to pounce on people and companies who don’t think the same as them. These people/groups talk about being inclusive right up and until the others don’t share their points of view. It’s exhausting There are 1,000s of companies across the country do this very same thing without any fan fare. Just stop it!!!
- 93po 4y agoYou see the same thing when a Tesla car catches fire after an accident. It's front page international news. I saw an F150 on fire on the side of the highway a few weeks ago. I'm sure there's a large public outcry about Ford as well.
- bombcar 4y agoIf it was an electric F150 it probably would have been news.
- gamblor956 4y agoF150s have gasoline, which is known to catch fire. In fact, that's kind of the whole point of gasoline: it it flammable. With a car fire, it is simply that the fire has escaped the part of the vehicle where the fire is supposed to be contained. EVs are not supposed to catch fire, thus it is news when they do.
- MrOwnPut 4y agoLithium isn't supposed to be flammable but gasoline is in your mind? What kind of logic is that? Both are flammable and both take as many precautions as possible (with our knowledge) to not be in a car, but still can in extreme conditions (crashes). The main difference is chemical fires are harder to put out, but you just have to carry the right suppressant. But with Tesla, yes they make the news than other cars, including other EVs, because... politics.
- gamblor956 4y ago
- joshe 4y agoMid term (2-5 years) it seems like it would be optimal for Twitter to leave SF. Downtown isn't that great to work in and the Elon hate is red hot. They could still keep their SF employees as a satellite office. Bailing on what is surely a very pricey lease is an attractive bonus :-). Though, it would be hilarious if Twitter's no work from home policy lead to downtown revitalization :0). I still think SF has a lot to offer startups, but it's no longer essential. Talent has scattered a bit and work from home will continue to drain people away. Also you probably want to run content moderation from somewhere a little less lopsided ideology-wise. A little more normie like Salt Lake City, Phoenix, or Austin. Ideally a content moderator should be able to have a civil lunch with 80% of the country.
- bdcravens 4y ago> Also you probably want to run content moderation from somewhere a little less lopsided ideology-wise. A little more normie like Salt Lake City, Phoenix, or Austin. Ideally a content moderator should be able to have a civil lunch with 80% of the country. Musk fired a significant number of content moderators; I haven't seen any indications that they plan to rehire those roles elsewhere.
- longbilly 4y agoHonest question here, do you think Twitter will be around in 2-5 years?
- drc37 4y agoYes
- coldcode 4y agoI once worked for a company during Dotcom that failed to pay rent for 7 months, was then forced into Chap 7 at 4:30 PM on a Thursday (we were given 30 mins to vacate the office). The building management then padlocked the doors leaving everything inside for the next 7 months while the they and the major creditor fought over rent and the contents. Turned out the building and the creditor were in fact parts of the same company - Merrill Lynch. They locked themselves out. You can go quite long without paying rent.
- strangattractor 4y agoMaybe Musk has changed his mind about remote work:) Certainly don't need that office if you're employees work form home.
- Qub3d 4y agoMy jaded opinion is that Musk may not really care about remote work, but it turns out return-to-office requirements are a useful way to get people to leave without having to fire or lay them off, and bypass stuff like the WARN act. > “Day zero. Sharpen your blades boys," Calacanis texted Musk. "2 day a week Office requirement = 20% voluntary departures.” https://mashable.com/article/elon-musk-twitter-text-messages-joe-rogan-gayle-king https://mashable.com/article/elon-musk-twitter-text-messages...
- Psyonic 4y agoI think it's both -- I do think he's against remote work (remember his remarks at Tesla "pretend to work somewhere else": https://www.forbes.com/sites/annakaplan/2022/06/01/musk-says-tesla-staff-can-pretend-to-work-somewhere-else-following-leaked-emails-ending-remote-work/?sh=55a2f5d281d8 https://www.forbes.com/sites/annakaplan/2022/06/01/musk-says...) but also it's a great way to cheaply get rid of a lot of employees who were told they could WFH forever.
- ck2 4y agoHe's never going to pay and then use it as an excuse to move everyone to Texas. I mean that's not a difficult or outlandish guess.
- iancmceachern 4y agoOne thing is for sure, if Twitter ever is looking for new space they will have trouble finding a commercial landlord willing to lease to them. Perhaps a smaller space in the same area as a larger space they had but closed, this behavior makes it more difficult to do business int he future for them.
- DoesntMatter22 4y agoLol no they won't. They are desperate for anyone they can get
- iancmceachern 4y agoNot really. Sears and JcPenny's are desperate for customers, but they're not giving stuff away. The 10% return they get from liquidating the inventory and store fixtures. Same here. Liquidating the vacant property, even at a net loss (which likely wouldn't be the case, if they've owned the property for more than a few years they likely would walk away net positive) would be the best course of action, not giving free rent to a billionaire.
- DoesntMatter22 4y agoWhat an inapplicable analogy
- kibwen 4y agoIt's true that commercial landlords are desperate, but even the most desperate landlord isn't making any money if their tenant isn't paying. That is, unless the business model is "rent to Elon Musk, then make a profit on the lawsuit when he inevitably stiffs you".
- DoesntMatter22 4y agoThis is some sort of dispute, I'm not sure over what but it's not related to solvency.
- rchaud 4y agoSome real "Art of the Deal" management here: delay invoice payments in an effort to bully suppliers into offering better terms, betting that they won't want the hassle of a court trial.
- MrOwnPut 4y agoThis just in, Hacker News is now pro-landlord. California property owners are under attack!
- lenocinor 4y agoHappening in Seattle too (minus the suing), seems like a trend: https://www.seattletimes.com/business/facing-eviction-twitter-closes-seattle-office-reports-say/ https://www.seattletimes.com/business/facing-eviction-twitte...
- anuraaga 4y agoDo these lawsuits usually end with a significant punitive fee? If it's just a small, if any part, on top of rent it's a free loan - which is very scammy but similar to tax optimization, what is possible will be done.