The landlord for one of Twitter Inc.’s offices files suit against the social media business, saying that Musk and company failed to pay $136,260 in rent for office space. This is likely to be the first of many legal problems for Elon Musk.
“Not paying your debts is a short-term strategy often employed by companies in financial trouble,” said Gregory Germain, a professor of law at Syracuse University. “But creditors have legal remedies, too. Presumably, Mr. Musk is hoping to renegotiate the terms of Twitter’s obligations with its creditors. How that works out remains to be seen.”
The landlord, Columbia Reit-650 California LLC, filed the claim this week with respect to rent owed on office property at 650 California Street, as the Wall Street Journal reported. Since Elon Musk paid $44 billion to purchase Twitter in October, several employees have been let go, including those in the media department. He did not react to a tweet asking for comments on the complaint.
Upon the completion of the transaction, the CEO of Tesla Inc. TSLA, +5.12% immediately implemented major layoffs at Twitter in an effort to save expenses, and he was met with a wave of resignations. According to a New York Times article published in early December, Musk had ceased paying rent on the company’s premises and instructed staff to stop paying vendors.
Musk revamped Twitter’s legal department, refused to pay a $197,725 bill for private charter flights made the week of his takeover — and was considering denying severance payments to thousands of people who have been laid off since his deal, the Times reported, citing people described as familiar with internal conversations.
“It is illegal not to pay your rent, in the sense that it is a breach of contract,” said Syracuse’s Germain. “Landlords have remedies if tenants do not pay their rent — they can evict them, and they can sue them for damages for breach of contract. Vendors who have not been paid likewise have remedies to sue for damages, and may stop providing goods and services to Twitter if Twitter fails to pay its debts to the creditors when due.”
The landlord of a building where Twitter Inc. has an office uses the social media firm, alleging that CEO Elon Musk and the company owe $136,260 in unpaid rent. This is probably only the beginning of Elon Musk’s legal woes.
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