Twitter is being sued by California Property Trust for failing to pay $136,250 in rent for its San Francisco headquarters under its new CEO Elon Musk.
On December 16, Columbia Reit - 650 California LLC informed Twitter that its failure to pay the outstanding rent within five days would result in a breach of the lease for the premises.
Twitter Reportedly Failed To Pay Rent Due To Recent Cost-Cutting Efforts
A seven-year contract agreed in 2017 allows Twitter to occupy the 30th level of the Hartford Building, a skyscraper on the outskirts of San Francisco's Financial District.
According to Engadget, California Property Trust alleged that Twitter disobeyed the ruling in a complaint it submitted to the San Francisco County Superior Court this week.
As per a report from December 13, it was also stated that the social media company had recently stopped paying rent on all of its international operations to reduce costs.
The New York Times reported on Twitter's freeloading at the beginning of last month, stating that the billionaire and his advisers sought to renegotiate lease conditions following large layoffs.
As a cost-saving measure on Christmas Eve, Musk also sent personnel to a data center in Sacramento to take down important servers.
Cuts to the company's infrastructure and public policy divisions were made last week, according to the report, and layoffs have since continued.
According to the New York Post, staff members have been instructed to postpone paying contractors or suppliers, including accountants and consultants engaged in important regulatory assignments.
The company must also pay banks an estimated $1 billion in interest payments per year as a result of the money the new Twitter chief borrowed to help finance his acquisition of Twitter.
It can be remembered that Musk has made significant cost-cutting moves after purchasing Twitter for $44 billion in October.
Twitter is apparently under investigation by the Federal Trade Commission, thus Musk looks to be seeking to cut costs as the company prepares for more legal battles.
Additionally, he made the announcement last month, following a Twitter vote, that he would stand down as CEO once he found a successor.
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Twitter Continues To Suffer As Musk Drags The Company Down With Him
In addition to the rent lawsuit, the business is being sued for failing to reimburse Musk for $197,725 in charter flights he took during his first week working for Twitter.
Around the same time, Musk is said to have added "more than half a dozen" lawyers from SpaceX to Twitter's legal team to support its counter suit, Engadget reports.
Because of these issues, Business Insider writes that Musk's team is considering not paying the severance at all to avoid any legal action from enraged former employees.
In yet another cost-cutting measure, Twitter recently put workplace supplies up for auction, but the social network did not immediately comment on the matter.
With this, Musk's representatives are attempting to secure more investment in Twitter amid reports that the firm has stopped paying its vendors and rent, Yahoo Finance says.
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