The weird merry-go-round involving Twitter’s unpaid bills shows no sign of slowing. On this whirl, it is KKR suing the social media company for failing to pay rent on office space in Oakland, California. Already in arrears in Boston, San Francisco and London, the beleaguered bird is now facing a demand for $1.3 million due to the alleged breach of contract.
Possibly these are strategic pauses, an effort by Elon Musk to extract better lease terms. Classically, however, failure to make payments under a commercial lease has often signaled that a company has severe cash flow problems.
Nowadays, few people remember that for half a century, the Great Atlantic and Pacific Tea Company was the nation’s largest retailer. But in 2010, when a much-smaller A&P stopped making lease payments on the space it had left, nobody was surprised that bankruptcy soon followed. During the 1990s, observers knew the end of Home Insurance Co. was near when the onetime industry giant suspended its multi-million-dollar annual lease payments on its classic building at building at 59 Maiden Lane in New York’s financial district. (Ironically, the plaza still bears the company name.)
