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Comment by joegahona | Hacker News Reader

> Twitter hasn’t paid rent on its headquarters, or any of its other global offices, in weeks, the New York Times reported on Dec. 13.

Isn’t rent paid once per month? When I was a renter, this could’ve been said about me literally every month, once two weeks had elapsed between payments.

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It likely means that the rent payment is overdue by weeks.

According to the landlord Twitter is supposed to have been “in default” on their lease as of Dec 21. It’s like the second sentence of the Bloomberg article we’re commenting on, before the subscription fold.

I would be interested in knowing how many other tenants this landlord has chosen to file suit on when the tenant is 7 days over due (in default in 21st, filed the suit on the 29th)? Seem very aggressive.

I wonder if politics has any bearing on their choice to file? Or the fact that Elon has publicly been considering closing the SanFran HQ?

> I wonder if politics has any bearing on their choice to file? Or the fact that Elon has publicly been considering closing the SanFran HQ?

I suspect a bigger the fact that Elon has repeatedly publicly indicated things like that Twitter has been barreling toward bankruptcy since around the time of his offer to buy, and that a filing may be imminent within the next year. (Now, those public statements have been largely to deflect public criticism of his management decisions and bully employees into accept poor working conditions, but creditors can hear and react to them, too.)

The fact that Twitter currently has loan payments in excess of last year's profits could be a factor. Delaying means they will be more likely to be entangled in a bankruptcy and potentially get a worse outcome if they are. Even a low probability bankruptcy would encourage some urgency.

They aren't going to go bankrupt. But they have been a money losing operation 14 of 15 years

They now have $1b in debt interest due every year.

Yeah but they also cut two thirds of thier staff and have cut other costs and will continue to do so.

People here hate musk but Twitter will no go out of business.

I don’t know anything about Twitter’s books but Loan payments in excess of profits doesn’t mean you’re insolvent. It doesn’t even mean you’re losing money. You can be gaining money each year while paying more in loans than you take home in profit.

The key thing here is that the loan payments are new, and are greater than profits were before the loan payments. That doesn't necessarily mean they are losing money -- revenue could have increased, or costs decreased, to make up the difference. Losing money also wouldn't mean they're insolvent -- that only happens once liabilities exceed assets.

Still, it's definitely a signal that creditors will take note of. Good luck renting an apartment as an individual with books that look like that.

Ehhh… loans are of course an important part of the books, as is profit, but I would hold that profit/loan payments is an obscure and unhelpful metric that a competent analyst is unlikely to utilize.

I admit that I have not done a good job of explaining what I'm driving at here, but payment shock is neither an obscure nor unhelpful concept in consumer finance. If you suddenly take on a very large, new payment, that creditor will want to see some separate evidence that you can make said payment. An income statement is one such piece of evidence, but obviously Twitter can't use that since they weren't earning enough to make the payments before.

Obviously corporate finance is a very different world. Musk was obviously able to demonstrate to his new creditors' satisfaction that Twitter will be able to make these payments (I don't see evidence of an ulterior motive here). It's still a real concept. Not conclusive on its own, but it is a signal among many.

Hmm, if you had net profit of X, and suddenly have a new expense of N * X, where N is greater than 2, I think that's worth taking note of, be it low payments, a lawsuit settlement, or otherwise.

It’s really not though. This comparison is just a bad way to think about things. We have plenty of well established financial ratios that tell you something useful about an org. This is not one of them.

Interest expense hits net income. Actual debt payments do not. The ratio is out of whack if you didn’t make a profit last year or had a tiny profit.

What are we actually trying to identify here? Insolvency? Leverage? Long term Credit risk? If you tried to present this as evidence for anything you’d get kicked out the door by someone who knows what they’re doing.

Maybe they took on a ton of new debt. That is interesting! But the way you explore the salience of that fact is not by comparing the next year’s debt payment to the last year’s net income…

So how would someone who "knows what they are doing" evaluate the credit risk of Twitter given only the information available to those outside of Twitter? You keep telling us how not to do it, so what is the right way, and what does that way tell us?

I don’t know what is and isn’t available for Twitter. I don’t really care and my lack of a precise answer here doesn’t make the given answer more useful.

But generally you would look at things like the current ratio, the debt to equity ratio, the interest coverage ratio; and of course a look at what’s changing in the business landscape, what the debt will be used for, what competition is doing, etc.

You could also look at the credit ratings of companies which for Twitter looks like it was recently brought down to a B- and then removed due to missing information by S&P.

I don't understand the urge to see politics everywhere, even in a normal business practice.

If you boil everything you disagree with down to "politics" then you can put it in a neat little box and pretend it doesn't exist, or that you're "above" it

It's intellectually dishonest and absolutely insulting

I assume they’re quick to file lawsuits with larger clients because of the correspondingly larger financial liability involved (large office space, large rent, unclear corporate finances). That seems like a very normal reason to be “fast on the draw,” all incentives considered.

Doesn't in default mean they had several reminders to pay and have now defaulted and invalidated their lease agreement?

As soon as your 1 day late you are in default. Most organizations however give noticed and plenty of time before filing law suits thus my question. The "news" here seems to be lacking any context, and I assume bad intentions on the part of NY Times and Bloomberg so...

The article is too vague on details, and I don't see the actual court filing readily accessible (bad journalists! always give a link to court filings!). But given the timeline and the wording, it seems likely to me that Twitter has not paid its rent for November or December--in other words, it's not one, but two missed payments. If that is indeed the case, then I do not find it all surprising that a lawsuit would be so aggressively filed after the second missed payment.

Even if not the case, Twitter has had very public issues which make it extremely likely that it is intentionally not paying the bills that are due. Thus, if the landlord wants to get its money, it either has to get Twitter to renegotiate its contract to one that it is willing to pay, or go to court to force Twitter to abide to the contract (including, potentially, invoking early termination clause). I don't know how much Twitter is behind on to this landlord, but the initial filing costs to the landlord are likely to be in the realm of a few thousand dollars, so it doesn't take much for it to be worth it to the landlord to sue pretty aggressively.

I found it here[1] on the SF court website. It looks like they didn't pay December rent, due on the 1st. They gave them 5 days notice on the 16th and by the 29th they still hadn't paid.

[1] https://webapps.sftc.org/ci/CaseInfo.dll?SessionID=333998CD0...

It’s very likely this isn’t their first time running behind on rent.

So you think Twitter is being sued for non-payment of rent based on misinterpreted semantics?

Commercial leases specify payments and default deadlines.

When it's 100x your apartment rent on the line, late payments don't happen. The landlord will be lucky to recover the costs they're collecting while rent remains unpaid.

Edit: reminded me of this :-D

https://abcnews.go.com/Business/bank-america-florida-foreclo...

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