David Leffler, a partner in Culhane Meadows’ New York office, was recently interviewed for an article by International Business Times which explores what businesses can do to renegotiate their bills in light of the pandemic.
Here are some excerpts from David’s interview:
When it comes to rent, one approach is to offer a percentage of gross revenues. For retailers, rent typically comes to 6% to 8% of sales, according to Hans Hansson, president and founder of Starboard Commercial real estate. With that in mind, companies can offer to pay that percent of current revenues, the latter defined as “whatever comes through the door,” he says. In fact, says Hansson, this strategy can be followed by any business looking for a break on office rent.
In many cases, landlords will require that small businesses prove they can’t pay the rent, a process that can involve a lot of paperwork. According to David Leffler, a partner with the Dallas-based law firm Culhane Meadows, it means filling out extensive documentation with the amount of cash reserves, revenues, government programs the business has applied to, and other information. “Landlords aren’t looking to give new terms to just anybody,” he says.
Hansson agrees. He points to a San Francisco tech firm that moved into office space three months ago after raising a “substantial” amount of money. When the company asked for a break on rent, he wanted to know why: “The business might have shifted, but they need to prove it,” he says. So Hannson asked for financial statements verifying the need–documents the owners wouldn’t provide. They didn’t get the break.
The complete article can be found here.
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