According to reports, Elon Musk has ceased paying rent for office spaces used by Twitter since he became the owner in October 2022. Consequently, several landlords have taken legal action against the social media company. KKR and Co., an affiliate of 1330 Broadway, filed a lawsuit for $1.3 million, claiming that Twitter has not paid rent for its Oakland, California office since November 2022.
In an attempt to reduce costs at Twitter, Musk has allegedly told a former Twitter executive to ‘let them sue’ when concerned about unpaid bills. This statement was a constant refrain from Musk, according to a former senior staffer who was laid off in the company’s recent staff reduction. The Wall Street Journal estimated that the total amount being sought in lawsuits by landlords and vendors against Twitter is $14 million.
While this amount may appear small for a company purchased for $44 billion and still valued at $20 billion, Musk’s ‘let them sue’ approach has received attention amid Twitter’s ongoing cost-cutting measures.
Stephen L. Carter, a law professor at Yale University, wrote in Bloomberg that Musk’s withholding of payments is likely part of what is known as the ‘holdup game’ strategy.
This opportunistic effort involves forcing a counterparty into better terms, even if they are not in a position to resist demands. Carter suggests that Musk may be exhibiting his usual optimism and intends to catch up on payments, with interest, once advertisers return to Twitter, an event he has predicted.
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