Elon Musk’s Strategy for Saving Twitter: Breach Contracts

According to Ryan Mac, Mike Isaac and Kate Conger writing in The New York Times, Elon Musk is seeking to cut costs at the company for which he paid $44 billion by breaching contracts.  Specifically, according to the Times, Mr. Musk is:

• Instructing employees not to pay vendors;
• Not paying rent on Twitter’s office space;
• Not paying a $197,725 bill for private charter flights made the week of Mr. Musk’s takeover; and
• Contemplating not paying thousands of former employees the severance payments they are owed

As a contracts guy, I don’t care much for intentional breach.  As someone who can’t imagine what it’s like to run a company like Twitter, I also can’t imagine how this is a helpful strategy.  We reported last week on the cheeky demand letter that attorney Akiva Cohen sent to the “Chief Twit” on behalf of terminated Twitter employees.  Not paying one’s clear contractual obligations is more expensive than paying them, given litigation costs.   Unless of course, you are hoping to have those debts excused in bankruptcy.  .  .  .

Seems like we’ve seen this business model before, but absent constitutional amendment, Mr. Musk is not headed to the White House.  Does he want to be the governor of California?  They had the Governator; do they want the Teslarnor?  The GovernX?  The Twitternor?

There’s also the irony that Mr. Musk is demanding that his employees come to work rather than working remotely, but that’s hard to do if you get evicted from your office space for not paying rent.