Alejandro Arrieche
The US-based advisory firm Innisfree is reportedly joining the growing list of companies that are suing Elon Musk’s Twitter due to unpaid bills according to documents filed with the New York State Supreme Court last Friday.
As per the lawsuit, Twitter owns this vendor a total of $1.9 million for advising the company during the acquisition process led by Elon Musk. The company was reportedly hired to handle the paperwork that needed to be sent to stockholders in September last year when they were required to vote in favor or against the takeover.
Innisfree followed up with Twitter two times in December and was told at the time that the payment request had already been processed. However, the social media company has not yet honored the commitment.
Also read: Elon Musk Proposes to Keep a Free Version of Twitter’s API for ‘Good’ Bots
Several landlords have also sued Twitter for unpaid rent including the San Francisco-based real estate firm SRI Nine Market Square, which leased an office located on Market Street. Twitter reportedly owns $3.4 million from due rent payments dating back to December last year.
In addition, Your Majesty’s King Charles III property management company in the United Kingdom – also known as the Crown State – is suing the company now owned by Musk for the same concept. Other suitors that are pursuing similar causes also include Canary Marketing, a San Francisco-based marketing company that is owed nearly $400,000.
Are Twitter’s Finances in Poor Shape?
Twitter employees who are still working at its offices have complained about the lack of janitorial services and some reports say that some are even bringing their own toilet paper to work.
In Singapore, the staff was temporarily evicted from their offices until the company paid its dues with the proprietor of the building at the last minute. Twitter has also been auctioning several items that furnished its offices across the world including a statue of its bird logo that was located in the San Francisco headquarters for $100,000.
Even though these proceedings and issues are not necessarily an indication that Twitter’s finances are in poor shape, the company’s unpaid bills – and related legal proceedings – appear to be stacking up at a point when advertising revenues are plummeting.
Twitter is facing multiple financial headwinds ever since Musk took over. First, advertisers ran for the hills as they feared that the actions taken by Musk right after he became Chief Executive Officer of the firm – including laying off nearly half of the firm’s workforce – could lead to a deterioration in the platform’s content moderation capacity.
Also read: Tesla Stock Rises as ‘Teflon’ Musk Wins Yet Another Legal Battle
It was advertisers’ top concern that hate speech, racism, and fake news would spread like wildfire as Musk fired thousands of contractors as well, many of which had the task of flagging and deleting harmful content.
Moreover, Musk gave the nod to the resumption of political ads and cause-based content within the platform. In an environment lacking oversight, this could lead to misinformation being spread by using paid adverts viewed by thousands or even millions of people.
Former Employees Are Also Seeking Compensation for Their Trouble
Twitter’s massive layoffs are now coming back to haunt the firm as a growing number of employees are filing lawsuits against it. Lisa Bloom, a high-profile American attorney, has taken cases from over 100 ex-Twitter employees who are demanding compensation for Musk’s actions.
The exact legal claim that these employees have is not entirely clear but this means that Twitter will have its hands full of legal proceedings and may end up spending a lot more than it is managing to save to make sure these cases don’t end up going to court, which would dramatically lengthen their financial impact on its top line.
Musk is facing a tough road to make Twitter a profitable endeavor – one of his primary goals – and has already stated that the company could be on the “fast lane” to bankruptcy. In response, Musk has focused on developing a subscription-centered business model with the company now charging users $11 a month or so for signing up for Twitter Blue.
Moreover, developers will also be charged for using the firm’s application programming interface (API) after decades of accessing the social media platform’s systems for free.
Other Related Articles:
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This article was written for Business 2 Community by Alejandro Arrieche.
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