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It's a letter of credit. Not a line of credit. Not an escrow account. Not a prepayment. It's not obscure like the author of the article thinks. Letters of cr
by appleiigs 3y ago
It's a letter of credit. Not a line of credit. Not an escrow account. Not a prepayment. It's not obscure like the author of the article thinks. Letters of credit are a very common arrangement.
Effectively, it's a guarantee provided by a bank saying, "if Twitter doesn't pay, we will". Now it's up to the bank to get repaid by Twitter.
- devindotcom 3y agoIt's the details that are obscure - when or if Twitter ever paid rent directly or if (as some of the other pubs have suggested) it just established this bucket and said withdraw as needed. The setup predates Musk so it's possible there was some mix.
- appleiigs 3y agoNo, it's not a bucket to pay your rent.
- red_trumpet 3y agoWhat's the $900,000 amount then? Is that just the limit, how much the bank will pay at most?
- appleiigs 3y agoIt's the max amount that the landlord can claim. It's typically a negotiated dollar amount between Twitter and landlord. Usually put in place at beginning of lease. Pretty much same as a rental deposit, but instead of giving cash, Twitter provide an letter of credit.