The odds are 100% because it is already "actually happening". Whether it happens completely or not remains to be seen. But it's already a huge disgrace.
The eviction has already been ordered. It must be carried out by the end of July. That's not a new deadline to pay owed rent, that's just the timeline for executing the eviction.
Why wouldn't an eviction take place? Your comment implies that the money will just show up at the last minute, but as I read it it's way too late for the that when the sheriff gets called up to assist in the eviction.
All of the pieces are in place, and who wants a demonstrably unreliable tenant? End of July, call up the sheriff and shovel Twitter's stuff onto the streets. I don't own the building (or any building other than my own house), but I'd go looking for a tenant who pays their bills.
It's not unheard of for businesses to pay up when the punitive action is real and on their doorstep (see BoA branch being foreclosed on for failing to pay a legal settlement paying up on the day of: https://business.time.com/2011/06/06/homeowner-forecloses-on...)
It's quite likely Boulder is actually more than fine, his brother Kimbal is or was involved with at least one restaurant there, but he doesn't like the airport situation. The one in Boulder is too small and the one in Superior is too far away.
I've seen this several times and just not really understood the end game.
Surely they'll be pursued for the rent (plus costs) & evicted along the way. The landlords aren't individual employees he can just shit on and assume they won't sue.
For me this was the final nail in the coffin for the "Elon's just playing 4D chess we don't understand" argument and really just shows that he's a dude that thinks he can do whatever he wants with no consequences, because so far there haven't really been any.
If there were a logic to it, I'd guess that it's more important he make the interest payments on the billions of dollars in loans he took out for the purchase than it is to not get sued for non-payment of a lease.
> he's a dude that thinks he can do whatever he wants with no consequences
That's been clear to me for many years, but for me, the nail in that coffin was the whole "pedo guy" thing. It was a great demonstration of what a despicable person he is.
The rationale at the time was that Musk was refusing to pay so that he could cut a better deal with Twitter, which might even be true, but it was still a stupid waste of time (and money paid to lawyers).
The punchline of all this is that his main argument was that bots devalued Twitter, and the bot problem has become so much worse in recent months, to the extent that it's become a meme to mess with the bots that sell t-shirts.
He wasn't really forced to buy it. There was a $1 billion buyout option of the contract apparently. I believe he paid 44 billion it, when it was clearly worth half that after the stock lost value, so he chose to waste 20 billion instead of 1 billion to save his ego. But instead he's destroyed whatever part of his reputation was left.
There was not a 1 billion dollar buyout option, the 1 billion dollar penalty was if he could not obtain financing, which he was perfectly capable of doing, or if a regulator blocked the deal, it wasn't something he had the right to use, just a penalty he would be forced to pay if he couldn't close the deal.
Oh I thank you for the extra information. I think he could have sabotaged the financing if you tried hard. So he agreed to pay for 44 billion odd dollars for Twitter no matter what? That's a very questionable deal.
I would suspect that if you sabotage funding to get out of a deal that you otherwise couldn’t get out of, the other party has a pretty good case to come after you for damages.
On it being a questionable deal, it’s not a consumer contract. It is assumed that both sides know what they’re doing in commercial deals; there’s little protection for incompetent participants. It might be questionable, but the participants have largely signed away the right to question it.
I don't think it was a questionable deal, at least without 20/20 hindsight. Twitter wasn't looking for a buyer, and Musk really, really wanted to buy it (until he didn't). If you have a highly motivated buyer and a not particularly motivated seller, you would expect the deal to be favorable to the seller. In order to convince Twitter owners to sell the company Musk had to essentially make them an offer so good they couldn't refuse. What other outcome would you expect?
If Musk lost in court, was ordered to go through with the deal, and then sabotaged the financing to try to get out of the deal, potentially a court could have thrown him in jail and said, "You are lying about not being able to go through with the financing, we find you in contempt of court and you are staying in jail until you obtain financing and close the deal." It's not very plausible that the world's richest man can't find financing on the deal.
Potentially a court could have also instead said, "Since you sabotaged the financing, you are in breach of contract. Twitter is worth 22 billion dollars today. You offered 44 billion dollars to buy it. You are hereby ordered to pay Twitter 22 billion dollars to make them whole." Presumably the court could have forced him to sell assets to pay up.
I don't think anyone knows for sure what would have happened in court but it seems he had a very weak case.
Maybe the end game is just to drive it to bankruptcy... And then get someone to swoop in with some marginal value. But paying for things would make it happen faster...
They can sue but do you know what the return of the suit is? Do you get your cash or do you spend cash + get less than what you were owed?
Most things settle and they settle for far less than the original amount. "It's just not worth it" the individual says. That's what Musk and others bank on.
In some countries it really is a lot easier to force a company to pay a debt; it can proceed to winding-up/bankruptcy/whatever pretty quickly if the debtor company is uncooperative.
As I understand it, US small claims court is _not_ like this; practical enforcement powers are usually fairly limited.
Also any commercial lease of this size would easily and immediately outstrip small claims' needs.
In general the attitude of big business or HNI is pay a lawyer, reduce the cost you actually pay to the vendor. Get a bulk pricing on lawyer hours (Retainer, tons of active issues anyway, etc)
It looks bad to us because we spend a lifetime being upfront and on it with obligations. We literally never want to be evicted but like any crime that has a fine, it is not really a crime. It is a price of doing business a certain way and the question is simply whether you can afford it.
"When informed of the risks of termination fees during a meeting on November 3,
2022, Steve Davis said "Well, we just won't pay those. We just won't pay landlords." Davis also told Hawkins, "We just won't pay rent." Twitter specifically directed Hawkins to breach its leases, whether by terminating
without any good faith justification under the terms of the applicable lease, or by simply stealing
from the landlords by intentionally remaining on the premises without any intention of paying
amounts Twitter knew and believed were its legal obligation to pay.
That's how rich people stay rich. I've many a personal anecdote where I've been part of the staff working events for 1%ers where they are squabbling over prices just for the kicks of convincing someone else to take less money or the sense of getting something someone else wouldn't get. Then they joke about it with the friends. This is not unique to Elon by any stretch. He just does it in a much more public manner than I have ever seen. Even more blatant than Trump which is infamous for this business tactic.
What's insane is that it's not actually how they stay rich. They'd be rich anyway. Most humans could live very comfortably with only the interest from one of their cash holding accounts. It's just arbitrary cruelty to other people because it makes them feel superior and salves their nouveau riche insecurities.
> Elon appears to believe he just doesn't need to pay for things
He's the equity anchor for the last cycle's top-tick LBO. He's trying to get to unlevered cash-flow positivity so he can renegotiate the debt from a position of relative strength. (That or wait until a regulator fines Twitter out of existence so he can blame them.)
Either way, he's–perhaps rationally–hyperbolically discounting. Cash today is worth more than that cash tomorrow plus court fees and reputation.
Cutting costs and playing chicken with the landlords. It can take months or even years to evict, especially if you're evicting a huge company with a dedicated legal staff.
I suspect Elon cares a whole lot more about making the billion dollar interest payments he owes to the Saudi financiers of his buyout than the little rent payments to landlords of corporate offices.
I mean, and i’m no elon musk fan, but i got taught a long time ago in a business class at secondary school, pay debts late but recover your own bills as fast as possible.
Let’s say twitter is a dumpster fire circling the drain, if they recover, they’ll have to pay, if they fail, the landlord will have to fight for the debt in a bankrupt company.
Regular people consider things like snowballing debt, past-due rent, huge business losses, bankruptcy and more as black marks that they must absolutely avoid at all costs. Others like Musk see them as what they really are - financial tools that they can use to get ahead.
If Twitter has an office that they don't use, in Musk's mind obviously they shouldn't pay rent for it. If the landlord tries to collect just ignore them. If they sue then tie them up in legal processes to make the costs unbearable. What are they going to do? Evict them? Great, that is the desired outcome.
> the Chicago-based landlord that owns Twitter’s offices at 3401 Bluff St in Boulder, was provided a $968,000 letter of credit back in February of 2020, which it has been drawing on to pay the rent in lieu of ordinary payments (the details of this arrangement are somewhat obscure).
Does this mean that Twitter hasn't been paying for this office in over three years? That there's just a line of credit the landlord has been drawing on?
it sounds to me like the line of credit is just a loan, such that the money for "rent" comes from a "loan" .. no cash flow involved. whoever wrote the line of credit is the one paying the rent. In large finance groups, I get the feeling this is ordinary back-scratch behavior.
One major difference is that with standard lines of credit it's a transaction between the bank loaning funds and the borrower only. With letters of credit, the payee is also a signatory to the contract.
edit: and I guess the payee's receiving financial institution is also a signatory if those are different entities from the payee! Or at least can be, I'm running into Dunning Kruger so I'll tap out now.
The difference between a line of credit and a letter, afaik, is you can't regenerate available credit with a letter by paying back. The letter of credit is a one-time sum, so you can't pay down partway through to extend the lifetime loan amount.
I'm not a financial analyst so take with grain of salt, that's just how I'd heard it discussed in banking.
This is super simple. Twitter put a deposit (think rental deposit) down on their lease in 2020. Instead of depositing $900k with the landlord they deposited 900k into a bank. In turn the bank issued a $900k letter of credit to the landlord who can use the funds in the same fashion a deposit could be used. This is done because LOCs are harder for other creditors to seize in bankruptcy court.
At some point Twitter stopped paying their rent and I’m sure there is a clause in the lease that allows the LL to draw down the letter of credit to pay the rent. Twitter also has an obligation the replenish the LOC.
As I understand it, it’s sort of like a bank acting as an escrow account where the landlord could draw from their account directly with a contractual guarantee from the bank that the funds would be there.
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.
It'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.
It'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.
it's not uncommon. the company nextdoor to a place i used to work had a bit of chaos one morning when everyone showed up to work only to find the constable had chain locked the front door. none of the employees had a clue that the company was not paying rent. lots of pleading to be allowed in long enough to gather personal effects. i was only 20 at the time, and it was a big influence on me to not bring a lot of personal items to my work place.
for those curious, making way is forward movement IIRC, and lee is opposite windward, e.g. if the wind is coming from the east and your ship is pointed north, the lee side is the west side, or something west of it is in its lee. I'm not actually sure where "leeway" would come to have its idiomatic meaning though, possibly that one has room for error in how carefully to direct the ship.
I can't figure out why Musk of all people, especially since he clearly resents paying rent, cannot figure out that one of the key the benefits of WFH is that the company avoids rent and basically co-opts the offices of it's employees (while remote workers also cost less and are a far larger hiring pool).
Of course it may have to do with the same management bias leading Musk to post that "Perhaps we just need a modern day Sulla" [0], a late despot of Rome who in the very reference that Musk posted was noted for "...to despotism, slavery, cruelty, and inhumanity, and the absence of any principle of good government."[1]; IOW, Musk is just a junior wannabe dictator.
He can't show up to the offices doing stupid stuff like carrying sinks and feeling like an emperor without people there to fawn in fear of losing their jobs.
Usually there's a provision to terminate a lease with a hefty fee attached, or you wait until it expires and don't renew it. Otherwise you still owe the money you agreed to in your contract (and likely other breach fee clauses as per lease).
If you don't need the office you can't just decide to stop paying but still occupy it.
Elon thinks they need it because they did not vacate it or break the lease. I don't think there are many tech companies that need a physical office in this day and age. That doesn't mean you can squat offices though.
A recent Behind the Bastards on Musk said that he decided to stop paying all of Twitter's bills. Claimed that SF was a "shithole" in an attempt to argue his rent there was too high. Lots of illegal orders and actions going on.
I'm surprised that I was surprised Musk just goes ahead with unsafe unpermitted monkey patches to his building just like the slumlords in my nowhere town.
Behind the bastards is excellent, I should start listening to that podcast again. It's fantastic that they're covering musk. Is there any explanation for why they think not paying their bills lead to a good outcome? Are there bills so high that somehow they control the other side or something ridiculous like that?
Aside: I never could get into it. It feels too much like 'punching down' to me. Not in the real sense, but the hosts always come off as 'better' and so when they make fun, it's just not a good vibe. The recordings also come off to me as unprofessional. Things like googling during the taping, not being well briefed on the material, being salty that they have to cut to ads (and there seem to be a lot of ads!), and just bad audio quality. I've really tried, but the podcast somehow rubs me the wrong way. What am I missing?
I don't know. I haven't listed to it for a year or two, but I enjoyed it in the beginning. They went through historical figures mostly. They talked about some famous dictators like Mussolini and Hitler, but there were many other ones. They had a show about the history of fascism in Italy that I think was part of that series. There were several attempts to take over the govt before Mussolini succeeded, it was eerily reminiscent of today's US.
I wish he would stick to the historical content. These days there's too much discussion of modern issues. I guess that's fine, but not what I personally want from the podcast.
Also, the guests can be pretty hit-or-miss. Some are great, some are pretty terrible.
I mean, the whole idea is that it’s about horrible people. Being nice about the horrible people is, unsurprisingly, not considered a priority. Not sure where punching down is coming from; almost all the subjects are either dictators or filthy rich. You can’t punch down on Stalin.
He occasionally does a non-bastard episode, and the tone is very different.
It's hit and miss, but the good episodes are worth listening to.
And of course there is the Steven Seagal two-parter, which is not only one of the best episodes of Behind The Bastards - it's one of the best podcast episode sets ever.
The lawsuit alleges that Boring Company CEO Steve Davis told plaintiff Joseph Killian, a 12-year Twitter veteran who oversaw office design, that Musk wanted to add a bathroom next to his office, so he didn't need to wake his security team (who escorted him everywhere in the building) when he needed to relieve himself in the middle of the night. Killian says he promised to jump right on that, but warned it would take time to get the permits approved.
Davis, the suit alleges, told him not to get the permits saying, "we don't have to follow those rules." When told no licensed plumber would do the job without a permit, Davis allegedly told Killian to hire an unlicensed plumber instead, which would have been a violation of the lease.
Biggest problem is kinda like many other small businesses, you end up being on call 24/7 (okay, really more like 18/7 since nobody is cleaning at 3 am.) and unable to take vacation, or even reliable weekend trips out of town.
Staffing is also a continual problem. Even if you pay significantly above market, cleaning isn't a very in-demand job, so you have to deal with both regular turnover and employee performance issues.
Can you expand on the mechanism behind this other justice system?
If it takes more money than rent, why do it. If it takes less money than rent, then everyone could not pay rent then have access to the money to access the separate justice system.
The “two justice systems” is a common rhetoric in class aware propaganda. The point is not that it you can buy your way into the “other justice system” it is that crimes committed by the owning class is prosecuted differently—if at all—than by the working class. The most clear cut example of this is how crack and cocaine possession had different punishments, crack popular among the working poor had harsher sentences than cocaine—which was popular among the rich—even thought it is the same drug.
Today you can see an equally clear cut example in e.g. Seattle’s attempt at re-criminalizing drug consumption. It is only public use which is being recriminalized, meaning this is basically just legislation against the homeless, The housed have a safe space where they can safely use and not be arrested.
Relating to OP, the two justice systems is simply how differently failure to meet financial obligation is prosecuted between the two classes. If a working person owed this much in rent, they would be forced into bankruptcy, or worse. Wage theft is allowed to fester unhindered without consequences. A working person who commits financial fraud and steals only a fraction of what their bosses have stolen from them, is usually met with a SWAT raid.
If a layperson stops paying rent they may be evicted and indebted for the back rent that they didn't pay.
If a large wealthy person stops paying for rent, the landlord might worry about a long and expensive legal and settle for a lot less than was owed.
The layperson is less likely to have the capital to prolong a legal battle and so is more likely to get stuck with the bill.
There are other economies of scale. If I stop paying for Google cloud my account quickly gets deactivated, but when Twitter stops paying they don't shut off service right away, they try to keep the client around and might offer discounts. If payment continues to be denied they may eventually shut off the service and settle for a portion of the cost of services extended during that time as above.
Wealthy people are given a ton of leeway until all the leeway immediately stops. You’ll see this throughout history. Elizabeth Holmes, etc.
A point made elsewhere, wealthy landlords have zero sympathy for those that cannot pay their bills. Their mightier than thou attitude that they didn’t get where they are in life by giving anything away for free or themselves getting any free lunches, so why should they cut anyone slack if they don’t pay their bills. However, they’ll be the first to not pay their bills if if the going gets tough because they have the knowledge of how the systems works.
It is actually a common practice, if you want to terminate the lease, to stop paying and get evicted. However, they may still be liable to pay for the three or four months they used.
most leases say your responsible for the remainder of the lease unless they're able to rent it out again, at least for residential, (though I'm not sure how eviction effects that).
Very, very, very few commercial leases have such a clause and local tenant laws generally do not apply to commercial leases.
If you're lucky, you can negotiate an "out" clause, where, given sufficient notice, you can terminate the lease early, but commercial landlords are very hesitant to do it.
There's a reason Start-ups love month-to-month co-working spaces.
This is why that strategy does not make sense to me. I don’t refute it _is_ a strategy that would undoubtedly work.
But if you’re on the hook for the full amount either way, why not just leave early and hand over the key? There’s less that could go wrong that you’d be responsible for, the space isn’t just sitting unused, and the owner has an opportunity to market it earlier.
Everyone walks away better for it. Plus you don’t have the negativity and expense of a lawsuit or an eviction or whatever else.
I hope not. When I was forced to leave my place, I couldn't even manage to pay the electricity bill. It'd simply be impossible for me to afford such a hefty sum + compound interest + late penalty fees, if the Landlord pursued me in a manner that led to my future wages being garnished to cover all that.
I resided there for four years and consistently paid on time, but by the fifth year, I simply couldn't meet all the financial obligations. I sincerely wish the Justice system would show more leniency instead of demanding that I repay the entire lease upon eviction.
Residential leases and commercial leases are wildly different. Residential leases are fairly boilerplate but commericial leases are bespoke and negotiated.
I know absolutely nothing about these agreements, but the idea seems at least plausible. An unoccupied building doesn’t get problems noticed or fixed, and could result in squatting.
I think there was a grocery store in the Cupertino Vallco some years before it was torn down. They were dark with a small table out front selling apples on the honor system. As I understand they had some lease provision that they would be open to drive customer visits to the mall.
It becomes a game where the landlord is weighing the costs of an eviction and the time that will take and getting a judgement for the unpaid rent and legal costs, and the likelihood of actually collecting on that, vs a negotiated settlement that lets them get the property back on the market as soon as possible and with the lowest costs.
I remember Hudson's Bay having to keep paying the rent on their expensive long term leases when they exited the Netherlands.
Dumbass company was so sure their operation would be a success.
Reneging on a written contract doesn't seem to have the same social stigma in America.
So far he seems to be right. NB I’m not Musk fan, but it’s pretty amazing how far vendors and landlords are willing to bend to maintain the prestige of having Twitter as a client
Do you have stats to back that up? Seriously I'd be curious and not disappointed at all, but when I go to twitter it looks as active as ever in my feed.
I don't think it's prestige; I think it's the lack of (for landlords) alternate paying customers.
I suspect if that we were in a pre-covid real estate market these evictions would have gone way faster. As it is, it's not like the landlord has potential customers waiting in the wings, so treating this as what it is (ie a price negotiation) seems like a value-optimizing strategy.
I think he's just looking at this rationally, as he should as a major share holder. His job is not to be nice but to deliver share holder value. That seems to be a thing that people just don't get. The debate around Twitter seems very emotional and opinionated.
But it's really quite simple:
Twitter had a spending problem. The history of that is actually not all that relevant. The ugly handover did not help of course and that caused a dip in advertising that combined with macro economic circumstances is just causing a massive cash flow problem. Like it or not, that problem added up to negative a few billion per year. Apparently things have recovered somewhat since Elon Musk started 'fixing' things but it's still not a great situation.
The bottom line is that an expensive office in Boulder Colorado is probably pretty high on the list of things to immediately cut. No matter how you look at what happened in Twitter, paying lots of cash for office space you don't need is not a great thing.
Office leases normally run for several years. So, a simple way to force the issue is to freeze the payments. You'll get evicted and sued, naturally. But what does this really mean in a situation where you just downsized staff by two thirds and they were reluctant to come back to the office anyway after Covid? Just making the point that the value of that office for Twitter was probably very low.
Not nice to do business like that, of course. But it is what it is and being nice is not the main job right now. Fixing the cash flow issues is. Paying for a mostly empty office in Colorado just isn't a high priority.
I don't actually see this having an unhappy end for Twitter. There will be some kind of settlement at some point and that will be it. The real estate market is imploding everywhere. So, the building owners might cut their losses at some point depending on how deep their pockets are and how big their stamina for pursuing this in the courts is. I have actually no idea how the real estate market in Colorado is but I imagine that won't be the only empty office in the area. Or judging from recent other articles on HN, everywhere else. Real estate is not a great business to be in right now.
There's more than a bit of a bubble there. Get a big fancy office, put a lot of overpaid staff in it, ????, profit. That ship has sailed. Twitter fired two thirds of their people and they are still there and they need a lot less office space now. Was that ugly: yes. How could it not be. But it happened and the situation needs fixing.
These are not the only creditors of course and I'm sure most are counting their cards right now and are going to be a lot more open to settling sooner rather than later. Not a bad outcome for Twitter if that works.
> I think he's just looking at this rationally, as he should as a major share holder. His job is not to be nice but to deliver share holder value
I was an avid Twitter user, but stopped using it because I find Musk super annoying and unethical. This is part of that. Complete and total brand destruction. That's not "delivering shareholder value". There's been massive markdowns to Twitter's valuation since Musk took over.
Obviously Musk thought it was a fair valuation since he paid it. He then decimated the company value by saddling it with unsustainable debt, chasing off advertising revenue and lighting the brand on fire, none of which have anything to do with COVID.
Let us be real here and acknowledge that he played around, made a big mistake and got called up to honor a bid he evidently didn't really stand behind. If he wanted twitter he could have been a lot more purposeful about acquiring it.
yea, everyone here is acting like Twitter is the only company doing this. The news has all kinds of stories about large commercial properties being surrendered to lenders, people backing out leases. etc
Commercial Real Estate in many cities is in a death spiral
Twitter did not in fact have that major of a spending problem. It was a somewhat profitable company, not greatly so, but not deep in the red. It however does now have a problem after Musk saddled it with debt that's going to cost $1B a year to service alone.
I don't know who owns the real estate, but it's not a difficult win. The terms of the lease is clear, and Twitter has the money to pay.
AIUI ol’ mini-hands is now so notorious for this behaviour that some of his lawyers require payment upfront, which would be very unusual for high end white collar crime stuff. Musk probably has a ways to go to catch up.
"Let's all return to the office, but let's also avoid paying for office space". That seems to have been Musk's strategy. Seems it has some obvious flaws.
Guys everyone in your office getting kicked out by the cops is a normal part of the negotiation process. You dumb people just don't know how businesses work.
>Unsure how I feel about TechCrunch just summarizing another source's article like this.
Do you just feel that way about Techcrunch or in general? Because that behaviour is blatant amongst news outlets, they report on each other's stories all. the. time.
I'd like to see the Venn diagram of the people who think that Musk is just being savvy by breaking contracts and the people who are vehemently against any student loan debt forgiveness, crying "You signed a contract!" and "It only benefits the wealthy!"
I'm not sure there's an apples-to-apples comparison to be made between the social and business decisions of an ostensibly-savvy 50+ year-old billionaire and the often-predatory loan schemes aimed at young adults with no leverage in the world yet.
Musk is defaulting, student loan forgiveness is the taxpayer picking up the tab. A better question would be if those people think students should be able to default on their loans.
What if you believe Musk should pay his contractual obligations and that student loan people should do the same? I suspect that is a pretty big overlap.
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[ 2.9 ms ] story [ 223 ms ] threadAnother question, shouldn't this cause Twitter's bond rating to fall ? That would mean they will see an interest rate raise, thus costing Musk more.
I'd lean towards "No, they won't actually be evicted."
That point?
All of the pieces are in place, and who wants a demonstrably unreliable tenant? End of July, call up the sheriff and shovel Twitter's stuff onto the streets. I don't own the building (or any building other than my own house), but I'd go looking for a tenant who pays their bills.
This landlord, however, may well be done with Twitter. "Pay what you owe, AND GTFO."
Edit: was until veeeery recently: https://www.denverpost.com/2023/01/05/kitchen-streetbar-clos...
> "Elon doesn't pay rent"
Among the many absolutely bonkers things in there, Elon appears to believe he just doesn't need to pay for things.
Surely they'll be pursued for the rent (plus costs) & evicted along the way. The landlords aren't individual employees he can just shit on and assume they won't sue.
If there were a logic to it, I'd guess that it's more important he make the interest payments on the billions of dollars in loans he took out for the purchase than it is to not get sued for non-payment of a lease.
That's been clear to me for many years, but for me, the nail in that coffin was the whole "pedo guy" thing. It was a great demonstration of what a despicable person he is.
The punchline of all this is that his main argument was that bots devalued Twitter, and the bot problem has become so much worse in recent months, to the extent that it's become a meme to mess with the bots that sell t-shirts.
On it being a questionable deal, it’s not a consumer contract. It is assumed that both sides know what they’re doing in commercial deals; there’s little protection for incompetent participants. It might be questionable, but the participants have largely signed away the right to question it.
If Musk lost in court, was ordered to go through with the deal, and then sabotaged the financing to try to get out of the deal, potentially a court could have thrown him in jail and said, "You are lying about not being able to go through with the financing, we find you in contempt of court and you are staying in jail until you obtain financing and close the deal." It's not very plausible that the world's richest man can't find financing on the deal.
Potentially a court could have also instead said, "Since you sabotaged the financing, you are in breach of contract. Twitter is worth 22 billion dollars today. You offered 44 billion dollars to buy it. You are hereby ordered to pay Twitter 22 billion dollars to make them whole." Presumably the court could have forced him to sell assets to pay up.
I don't think anyone knows for sure what would have happened in court but it seems he had a very weak case.
He can’t cry if he made a bad business decision. Or well he can, but it has no legal bearing.
So maybe it is to burn it all down.
Most things settle and they settle for far less than the original amount. "It's just not worth it" the individual says. That's what Musk and others bank on.
upto about $250,000, you pay a nominal fee, both sides represent themselves, you get whatever's owed + they pay your fees if you win
you have to pay their nominal fee and your own if you lose
and if they don't pay what's owed at that point you can send in the bayliff or begin winding up the company
with something like an unpaid lease for an office it would be over and done more or less instantly
Basically no lawyers, only you and only up to a certain amount (varies by state, usually ~5-10k$).
As I understand it, US small claims court is _not_ like this; practical enforcement powers are usually fairly limited.
In general the attitude of big business or HNI is pay a lawyer, reduce the cost you actually pay to the vendor. Get a bulk pricing on lawyer hours (Retainer, tons of active issues anyway, etc)
It looks bad to us because we spend a lifetime being upfront and on it with obligations. We literally never want to be evicted but like any crime that has a fine, it is not really a crime. It is a price of doing business a certain way and the question is simply whether you can afford it.
(good reference Ameo)
> Led by Musk and the cadres of sycophants
> Musk proceeded in line with the principle on which he generally operates: that keeping his contractual promises is optional.
and that's just in the first couple of pages, many more.
He's the equity anchor for the last cycle's top-tick LBO. He's trying to get to unlevered cash-flow positivity so he can renegotiate the debt from a position of relative strength. (That or wait until a regulator fines Twitter out of existence so he can blame them.)
Either way, he's–perhaps rationally–hyperbolically discounting. Cash today is worth more than that cash tomorrow plus court fees and reputation.
I just really really hope his hubris drives him into the ground.
I suspect Elon cares a whole lot more about making the billion dollar interest payments he owes to the Saudi financiers of his buyout than the little rent payments to landlords of corporate offices.
Let’s say twitter is a dumpster fire circling the drain, if they recover, they’ll have to pay, if they fail, the landlord will have to fight for the debt in a bankrupt company.
If Twitter has an office that they don't use, in Musk's mind obviously they shouldn't pay rent for it. If the landlord tries to collect just ignore them. If they sue then tie them up in legal processes to make the costs unbearable. What are they going to do? Evict them? Great, that is the desired outcome.
> the Chicago-based landlord that owns Twitter’s offices at 3401 Bluff St in Boulder, was provided a $968,000 letter of credit back in February of 2020, which it has been drawing on to pay the rent in lieu of ordinary payments (the details of this arrangement are somewhat obscure).
Does this mean that Twitter hasn't been paying for this office in over three years? That there's just a line of credit the landlord has been drawing on?
edit: and I guess the payee's receiving financial institution is also a signatory if those are different entities from the payee! Or at least can be, I'm running into Dunning Kruger so I'll tap out now.
I'm not a financial analyst so take with grain of salt, that's just how I'd heard it discussed in banking.
At some point Twitter stopped paying their rent and I’m sure there is a clause in the lease that allows the LL to draw down the letter of credit to pay the rent. Twitter also has an obligation the replenish the LOC.
https://en.wikipedia.org/wiki/Letter_of_credit
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.
At what point are they considered non-grata?
Edit: typo / etymology. Thank you.
I can't figure out why Musk of all people, especially since he clearly resents paying rent, cannot figure out that one of the key the benefits of WFH is that the company avoids rent and basically co-opts the offices of it's employees (while remote workers also cost less and are a far larger hiring pool).
Of course it may have to do with the same management bias leading Musk to post that "Perhaps we just need a modern day Sulla" [0], a late despot of Rome who in the very reference that Musk posted was noted for "...to despotism, slavery, cruelty, and inhumanity, and the absence of any principle of good government."[1]; IOW, Musk is just a junior wannabe dictator.
[0]https://twitter.com/elonmusk/status/1668673066115711011
[1] https://www.britannica.com/biography/Sulla
Let's say they don't need it.
You can't just stop paying your lease.
Usually there's a provision to terminate a lease with a hefty fee attached, or you wait until it expires and don't renew it. Otherwise you still owe the money you agreed to in your contract (and likely other breach fee clauses as per lease).
If you don't need the office you can't just decide to stop paying but still occupy it.
https://www.denverpost.com/2023/05/22/twitter-boulder-colora...
I wonder if this office was still occupied.
Also, the guests can be pretty hit-or-miss. Some are great, some are pretty terrible.
He occasionally does a non-bastard episode, and the tone is very different.
And of course there is the Steven Seagal two-parter, which is not only one of the best episodes of Behind The Bastards - it's one of the best podcast episode sets ever.
https://www.fastcompany.com/90898558/twitter-lawsuit-new-det...
```
THE TOILET
The lawsuit alleges that Boring Company CEO Steve Davis told plaintiff Joseph Killian, a 12-year Twitter veteran who oversaw office design, that Musk wanted to add a bathroom next to his office, so he didn't need to wake his security team (who escorted him everywhere in the building) when he needed to relieve himself in the middle of the night. Killian says he promised to jump right on that, but warned it would take time to get the permits approved.
Davis, the suit alleges, told him not to get the permits saying, "we don't have to follow those rules." When told no licensed plumber would do the job without a permit, Davis allegedly told Killian to hire an unlicensed plumber instead, which would have been a violation of the lease.
```
Biggest problem is kinda like many other small businesses, you end up being on call 24/7 (okay, really more like 18/7 since nobody is cleaning at 3 am.) and unable to take vacation, or even reliable weekend trips out of town.
Staffing is also a continual problem. Even if you pay significantly above market, cleaning isn't a very in-demand job, so you have to deal with both regular turnover and employee performance issues.
When you have enough money, they do. There are two completely separate justice systems in this world.
If it takes more money than rent, why do it. If it takes less money than rent, then everyone could not pay rent then have access to the money to access the separate justice system.
Today you can see an equally clear cut example in e.g. Seattle’s attempt at re-criminalizing drug consumption. It is only public use which is being recriminalized, meaning this is basically just legislation against the homeless, The housed have a safe space where they can safely use and not be arrested.
Relating to OP, the two justice systems is simply how differently failure to meet financial obligation is prosecuted between the two classes. If a working person owed this much in rent, they would be forced into bankruptcy, or worse. Wage theft is allowed to fester unhindered without consequences. A working person who commits financial fraud and steals only a fraction of what their bosses have stolen from them, is usually met with a SWAT raid.
If a large wealthy person stops paying for rent, the landlord might worry about a long and expensive legal and settle for a lot less than was owed.
The layperson is less likely to have the capital to prolong a legal battle and so is more likely to get stuck with the bill.
There are other economies of scale. If I stop paying for Google cloud my account quickly gets deactivated, but when Twitter stops paying they don't shut off service right away, they try to keep the client around and might offer discounts. If payment continues to be denied they may eventually shut off the service and settle for a portion of the cost of services extended during that time as above.
Wealthy people are given a ton of leeway until all the leeway immediately stops. You’ll see this throughout history. Elizabeth Holmes, etc.
A point made elsewhere, wealthy landlords have zero sympathy for those that cannot pay their bills. Their mightier than thou attitude that they didn’t get where they are in life by giving anything away for free or themselves getting any free lunches, so why should they cut anyone slack if they don’t pay their bills. However, they’ll be the first to not pay their bills if if the going gets tough because they have the knowledge of how the systems works.
If you're lucky, you can negotiate an "out" clause, where, given sufficient notice, you can terminate the lease early, but commercial landlords are very hesitant to do it.
There's a reason Start-ups love month-to-month co-working spaces.
But if you’re on the hook for the full amount either way, why not just leave early and hand over the key? There’s less that could go wrong that you’d be responsible for, the space isn’t just sitting unused, and the owner has an opportunity to market it earlier.
Everyone walks away better for it. Plus you don’t have the negativity and expense of a lawsuit or an eviction or whatever else.
Ninja edit: am I missing something?
ya the lease agreement
Saved 10 month of obligations
I resided there for four years and consistently paid on time, but by the fifth year, I simply couldn't meet all the financial obligations. I sincerely wish the Justice system would show more leniency instead of demanding that I repay the entire lease upon eviction.
Reneging on a written contract doesn't seem to have the same social stigma in America.
Wait, what? There's prestige in that?
Hating Musk doesn't change this.
I suspect if that we were in a pre-covid real estate market these evictions would have gone way faster. As it is, it's not like the landlord has potential customers waiting in the wings, so treating this as what it is (ie a price negotiation) seems like a value-optimizing strategy.
But it's really quite simple:
Twitter had a spending problem. The history of that is actually not all that relevant. The ugly handover did not help of course and that caused a dip in advertising that combined with macro economic circumstances is just causing a massive cash flow problem. Like it or not, that problem added up to negative a few billion per year. Apparently things have recovered somewhat since Elon Musk started 'fixing' things but it's still not a great situation.
The bottom line is that an expensive office in Boulder Colorado is probably pretty high on the list of things to immediately cut. No matter how you look at what happened in Twitter, paying lots of cash for office space you don't need is not a great thing.
Office leases normally run for several years. So, a simple way to force the issue is to freeze the payments. You'll get evicted and sued, naturally. But what does this really mean in a situation where you just downsized staff by two thirds and they were reluctant to come back to the office anyway after Covid? Just making the point that the value of that office for Twitter was probably very low.
Not nice to do business like that, of course. But it is what it is and being nice is not the main job right now. Fixing the cash flow issues is. Paying for a mostly empty office in Colorado just isn't a high priority.
I don't actually see this having an unhappy end for Twitter. There will be some kind of settlement at some point and that will be it. The real estate market is imploding everywhere. So, the building owners might cut their losses at some point depending on how deep their pockets are and how big their stamina for pursuing this in the courts is. I have actually no idea how the real estate market in Colorado is but I imagine that won't be the only empty office in the area. Or judging from recent other articles on HN, everywhere else. Real estate is not a great business to be in right now.
There's more than a bit of a bubble there. Get a big fancy office, put a lot of overpaid staff in it, ????, profit. That ship has sailed. Twitter fired two thirds of their people and they are still there and they need a lot less office space now. Was that ugly: yes. How could it not be. But it happened and the situation needs fixing.
These are not the only creditors of course and I'm sure most are counting their cards right now and are going to be a lot more open to settling sooner rather than later. Not a bad outcome for Twitter if that works.
I was an avid Twitter user, but stopped using it because I find Musk super annoying and unethical. This is part of that. Complete and total brand destruction. That's not "delivering shareholder value". There's been massive markdowns to Twitter's valuation since Musk took over.
That valuation was itself at the height of the COVID stock bubble.
Commercial Real Estate in many cities is in a death spiral
I don't know who owns the real estate, but it's not a difficult win. The terms of the lease is clear, and Twitter has the money to pay.
Donald Trump has entered the chat.
https://officesnapshots.com/2022/12/05/twitter-offices-bould...
/s just in case
https://www.bizjournals.com/denver/news/2023/06/13/boulder-t...
Unsure how I feel about TechCrunch just summarizing another source's article like this.
Do you just feel that way about Techcrunch or in general? Because that behaviour is blatant amongst news outlets, they report on each other's stories all. the. time.