Lawsuit: Twitter stopped paying rent at headquarters after Musk took over
Twitter is being sued for alleged nonpayment of rent by the owner of its US headquarters building in San Francisco, the latest of several lawsuits saying Twitter stopped paying bills after Elon Musk bought the company.
SRI had a letter of credit with Twitter amounting to $3.6 million "as security for Defendant's performance of its obligations under the Lease," the lawsuit said. Because Twitter failed to pay rent, SRI drew on the letter of credit, and it is now down to $1, the complaint said. Twitter allegedly failed to replenish the letter of credit as required by the lease.
SRI said the lease also requires Twitter to increase the letter of credit by $10 million upon a transfer of control and that such a transfer occurred when Musk bought Twitter in late October. SRI said it served Twitter with a demand to increase the letter of credit by $10 million in November but that Twitter responded to the notice by claiming it was not required to comply.
The building owner's complaint seeks $3.16 million plus late fees and interest for unpaid rent, additional damages for Twitter's breach of the lease, and a declaration that Twitter is obligated to increase the letter of credit by $10 million.
Twitter is facing a similar complaint in the High Court of London. "Britain's Crown Estate, an independent commercial business that manages the property portfolio belonging to the monarchy, said on Monday it had begun court proceedings against Twitter over alleged unpaid rent on its London headquarters," Reuters reported.
Four other lawsuits allege nonpayment
The SRI complaint is the second lawsuit against Twitter filed by a landlord in the San Francisco County Superior Court. The previous lawsuit, filed by Columbia REIT-650 California LLC, said Twitter failed to pay rent of $136,000 at the 650 California Street office tower in San Francisco. The space was leased by a mobile ad company purchased by Twitter in May 2020.
The latest lawsuit isn't much of a surprise because of an earlier report stating that Twitter wasn't paying rent on the headquarters and other buildings. "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," The New York Times musk-twitter-shakeup.html">reported on December 13.
Twitter was also sued last week by a consulting firm that says it was never paid the $2.19 million owed for work it did on the lawsuit that forced Musk to complete his purchase of the company. Previous lawsuits alleging Twitter failed to pay bills after Musk took over were filed by a software vendor and a private jet provider.
Twitter faces $1.5 billion in annual interest payments on the $13 billion of debt Musk used to fund his takeover, and the first payment "could be due as soon as the end of January," the Financial Times reported.
Musk said on November 4, 2022, that Twitter was losing over $4 million a day. He raised the prospect of bankruptcy but reportedly said on a podcast in late December, "We've got the expenses reasonably under control, so the company's not in the fast lane to bankruptcy anymore. It has been quite a roller coaster. It has its highs and lows, to say the least, but overall it seems to be going in a good direction."
Besides allegedly not paying bills, Musk has reduced Twitter's expenses by laying off half its staff, terminating thousands of contractors, and issuing an ultimatum that caused many employees to resign.