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'Dogfight' looms as landlords start suing restaurants over unpaid rent

thisismoney.co.uk

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Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#91

Post by Ididntdothis »

danharaj wrote: post #30

Over the past 40 years the West has fallen into a deep capitalist realism which completely erases the contingent nature of our economic system. Debt and property are not basic facts of reality, they require stable, predictable economic relations. Those are all out the window right now. It may be ideologically impossible for our governments, rentiers and financial institutions to acknowledge that the suspension of dai…

I think it would make sense that if businesses are told to close then to tell the landlords that rent payments will also stop. It seems pretty fair. Same for people whole have lost their job. You could also suspend rent payments for them. This may cause pain to the landlords but it seems fair to share the pain.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#92

Post by londons_explore »

ummonk wrote: post #47
papeda wrote: post #5

I find this question hard to think about. Who exactly should be pricing in the risk of something like this happening? On both sides there are agents who have taken on risk. Some of the agents paying rent overextended themselves even before the crisis. Some of the agents renting space did the same. So who should take the hit? Nobody (i.e., the government)? Even that solution seems wrong -- do we really want to incenti…

The way to be economically successful in modern America is to leverage yourself to the hilt to get massive returns during good times (while cautious savers miss out on getting such massive gains), and then turn around and ask for a bailout if things go south and the heavy leverage and lack of rainy day savings pushes you underwater.

The way to be economically successful is to extract those large profits from your company in the good times, then claim bankruptcy in the bad times. All your assets get sold off cheap, and you can use those extracted profits to form a new company to buy up the assets and continue business.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#93

Post by londons_explore »

Eldt wrote: post #58
papeda wrote: post #48

Earlier quoted context omitted.

Is this reasonable to expect from a business where 6 months of cash reserves are not legally required? Can't the restaurant that saves 1 month of reserves instead of 6 months charge lower prices and still turn a profit, thus outcompeting the prudent save-for-6-months restaurant?

Yeah, and then they get ruined by a pandemic or an assortment of other situations...

But 'ruin' simply involves claiming bankruptcy, then selling assets to someone else who will continue operations with 1 month reserves.

Overall, cost of business is lower.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#94

Post by londons_explore »

dahdum wrote: post #54
FartyMcFarter wrote: post #20

Earlier quoted context omitted.

> Government should take a hit, in my opinion. Government means "everyone who pays taxes". I'm not sure that's fair. I think it's fine to spend taxes rescuing people (including the business owners if they're in personal trouble), but rescuing businesses feels like a very different story.

If you don't rescue businesses, you end up needing to rescue a lot more people. You can also give loans (not tax dollars) to rescue business. People require grants.

"loans" given to businesses often turn into grants when the principal is written off in a few years time after the public spotlight has passed.

Sometimes government even announces that they intend to do that at fancy private dinners with a wink and a nudge...

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#95

Post by rebuilder »

Eldt wrote: post #58
papeda wrote: post #48

Earlier quoted context omitted.

Is this reasonable to expect from a business where 6 months of cash reserves are not legally required? Can't the restaurant that saves 1 month of reserves instead of 6 months charge lower prices and still turn a profit, thus outcompeting the prudent save-for-6-months restaurant?

Yeah, and then they get ruined by a pandemic or an assortment of other situations...

They do. And? Most businesses do not plan for this kind of disaster. Once in a blue moon, the ones that do are better off for it, but they have to survive decades of poor competitiveness to see that benefit.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#96

Post by rebuilder »

JonoW wrote: post #45

Whilst I'm sure landlords are in a tight spot too, what good actually comes from evicting any business right now? It's not like there are any new ones to take their place. Having an existing business with known revenue, waiting to restart once lock down ends seems better than hoping a new one will fare any better.

The landlords can probably keep the tenants' deposits if they get evicted or leave before their term is up. This can mean access to quite a bit of money rather quickly. And some tenants will have fixed-term leases with the contract expiring in a few months' time - for the landlord, forcing those tenants out of the contract before that term is up can be a win, because of the deposits.

Also, I don't think most businesses are literally out of cash yet. They're simply prioritizing other expenses, like wages. Landlords stand to benefit by forcing some of that money to go towards rent.

From a business perspective, it would be strange if the landlords did not try to get paid.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#97

Post by jasonjei »

rasz wrote: post #89
jasonjei wrote: post #25

Earlier quoted context omitted.

We just passed the CARES Act in the US, which gives small businesses a loan about 2.5 X their average monthly payroll. It is fully forgiven if used for payroll, rent, or utilities in the first 8 weeks.

Except banks refuse to give you any loan.

That’s not true. The way it’s administered is an SBA loan, which have very specific guidelines banks must follow.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#98

Post by tomp »

jandrewrogers wrote: post #56
tomp wrote: post #35

Earlier quoted context omitted.

It's an unprecedented catastrophe, and even if we will weather it, someone (well, many someones) will suffer (we'll all suffer, but some more than others). Besides solving the crisis (to which most of us cannot meaningfully contribute) the main priority is preserving the rest of the society so that we can go on with as little harm as possible when the immediate crisis (virus) is over. In this specific situation, it's…

One of the largest second-order effects of transferring all risk to landlords is that rents will go up because risk has a real financial cost that must be covered by cashflow. That will remain true no matter who ends up owning the property.

Maybe the house prices will go down instead.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#99

Post by rasz »

jasonjei wrote: post #97
rasz wrote: post #89

Earlier quoted context omitted.

Except banks refuse to give you any loan.

That’s not true. The way it’s administered is an SBA loan, which have very specific guidelines banks must follow.

https://www.thestreet.com/investing/bank-of-america-changes-...

might be getting better now

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