Is the calculation just that the cost of litigation will be less than the full contract lease? I don’t understand how that could work.
Bankruptcy and leases survey:
https://www.jdsupra.com/legalnews/what-to-do-when-commercial...
But it does signal (on the record, not just rumours) to literally anybody that Twitter is doing business with that they are distressed, and should be extended no credit. Payment up front, or no service.
The reasonable signal is yes indeed for Twitter vendors, if you are opex and a long contract, be ready to have our lawyers sit down and hash it out.
Disagree - this is automobile industry tactics where you pay your suppliers late and short because they have no choice. Musk is negotiating for lower rent.
A commercial landlord in downtown SF has many, many choices. The power imbalance here is not even remotely close to the one given in your analogy.
So I'm not sure this is the case tbh. but I'm also not sure if this applies here and I don't know the respective US laws.
In this case, they can file, rollover the debt into a new company with no financial loss and then recap the equity with Musk (who obviously has the money to do so) and other shareholders.
Also, the banks who own the debt do not want to run Twitter. All they want is to be able to mark the loan as performing...that is it. In cases where debtholders take over the company, the debt has usually been sold for significantly less than par to someone who wants to run the company. This isn't the case here because the debt is still worth par (imo, largely because it is obvious that a recap would be straightforward...it may be the case that Twitter's financial position is significantly worse, but we will need to wait and see).
Obviously, the question for the leases is how much it is, whether it is worth it, whether the landlord thinks they can get a new tenant (unlikely at this point), and whether the company can be relocated...the lease would have to be a rather large proportion of expenses to make this all worth it...but it may be worth it if the company is going to recap anyway (which seems likely).
This might have been true on October 26th. It's not obviously true today.
The banks who own the debt* do not believe so.
[Edit: early article postulating 20% writedowns https://www.reuters.com/markets/us/musks-banks-book-twitter-...
recent news with 50+% as a more appropriate writedown than 20% https://www.reuters.com/technology/fidelity-marks-down-value...
* because they haven't been able to sell it to anyone]
The 50% markdown that Fidelity is taking means that it is worth more than $20bn. Classic HN.
Care to explain? When the debt is already being marked down, how does the equity have any positive value? (other than maybe extreme variance, but I still don't see how that gets anywhere near 20?)
Part of it is that due to the (IMHO absurd to be legal) financial instruments Musk used to loan (part of) the money used to buy twitter, twitter has now a pretty high financial burden. Means it now has to earn much more to be profitable then before. (It was something which you could oversimplified describe as Musk taking out a lone in the name of twitter before being able to represent twitter to buy twitter..., in practice it's more convoluted then that but it's kinda similar.)
Through in the broader picture this specific case of Twitter is more then an indicator for something being wrong, like either impending Bankruptcy, him doing improper business and being very untrustworthy or him crippling the operations department to a point where Twitter has lost overview about what they need to pay where.
Anybody taking over Twitter will have years of work ahead of them to rebuild trust with advertisers, let alone addressing the core problem of growing user numbers. That was Musk's original job, which is not going well, even after he reinstated pillars of society like Andrew Tate and Trump.
So at least temporary he would lose control.
https://www.law.cornell.edu/uscode/text/11/362
https://www.law.cornell.edu/uscode/text/11/365
Edit: here's an easier to read article: https://www.jdsupra.com/legalnews/what-to-do-when-commercial...
That is what the automatic stay does--it provides the pause to make sure nobody gets to jump ahead in line. As long as the stay remains in place, the landlord (or any other creditor) is forbidden from taking steps to evict a debtor. But it is possible to get relief from the stay if you can demonstrate that you would not be jumping ahead in line, and often relief from stay motions can be heard quickly. If the debtor needs the stay in order to reorganize (the theory being that it is better to have a bigger pie) then the debtor can apply for an extension, but only if it provides "adequate protection," which generally means paying according to the terms of the contract, or supplying additional collateral, or some such.
Timing is important. Once you file, all legal actions against you cease, and that is a very powerful tool. Unfortunately, you can only use that tool once. (Well, if you are a human individual, you get another chance years later.)
That is a very brief sketch. I haven't been a lawyer for years. You can ask a real bankruptcy lawyer for details.
I often see the bailiff notices on defunct companies here. There is a standard form of letter that is pasted onto the door. Quite Victorian.
The reason why is that the debtor ceases to be in control of their own assets. The assets (and contracts and liabilities etc) become part of a bankruptcy estate that is administered by a trustee appointed to administer the estate in an appropriate manner, such as by liquidating assets and paying creditors in an equitable fashion.
Once the automatic stay is in effect, landlords can petition the bankruptcy court for permission to retake possession of their property, and can't do much of anything until they receive it or the case is closed.