First victory for Twitter in Elon Musk case
Instead of Musk’s selected February trial date, a Delaware court agreed to expedite the case. When a Delaware judge decided to expedite the lawsuit and set a trial date for October, Twitter Inc. gained an early advantage over Elon Musk in its fight to make him complete his $44 billion acquisition.
On Tuesday, Chancery Court Chief Judge Kathaleen St. J. McCormick changed the billionaire’s try from a two-week trial in February to a five-day trial in the fall. Twitter announced that as the founder of Tesla Inc. pulled out of the agreement and disparaged Twitter, it was suffering.
The decision represents Twitter’s first triumph in a trial where many legal experts predict Musk will lose.
Musk’s attorneys “underestimate the ability of this court to expeditiously process” complicated disputes in merger and acquisition cases, the judge said during a hearing in Wilmington, making it plain she saw little merit in their drive regarding timing.
The conflict around the precarious sale, according to McCormick, was “casting a fog of uncertainty” over Twitter. Continued delays, she added, “threaten imminent harm” to the business.
After the debate, the judge asked Twitter’s counsel no questions, but she did halt Musk’s attorney when he termed the Sept. 19 trial start Twitter had suggested: “preposterous.”
She cited a former place where the matter was done within three months and denied the Musk attorney’s assertion that it took her a year to bring another case to trial.
In less than an hour and a half, McCormick concluded the hearing, which was conducted remotely to accommodate her scene of Covid, by convincing the parties to deposit the precise October dates for the non-jury trial.
After the decision, Twitter share prices increased by 5.4 per cent. At 3:16 p.m. in New York, they were trading at $39.32, up 2.4 per cent. The stock has dropped as much as 22% since Musk tweeted that the acquisition was “on pause” in mid-May. Since the first two weeks after the transaction has come up, it hasn’t recently moved close to the acquisition price of $54.20 per share.
Lawyers for the San Francisco According to Twitter, they only had four days to show that the richest man in the world must uphold their deal.
Last week, Twitter launched a lawsuit to compel Musk to complete the deal.
Twitter’s attorney said that Musk was “contractually bound to utilise his best endeavours to conclude transaction” during the hearing on Tuesday. As against that, he is “doing the exact opposite,” according to lawyer William Savitt. “He’s sabotaging himself,”
According to Savitt, Musk is required by the buyout agreement to complete the transaction within two days of the accomplishments for completing all requirements. Early September will see the fulfilment of those prerequisites, he predicted.
The attorney declared, “Mr Musk has no intention of honouring any of his pledges.”
According to Musk’s legal team, Twitter pushed for a “warp speed” trial without justification. Musk said that by withholding specific information regarding so-called spam bot accounts that were already in its system, Twitter had burst the terms of the purchase agreement.
According to Musk’s attorneys, the lawsuit necessitates a “forensic assessment and analysis of enormous swathes of data” about the bots in addition to other legal considerations.
Musk’s attorney, Andrew Rossman, said at the hearing that there was no need to hasten the outcome of the case to fulfil the agreement’s October deadline. He told the judge that the crucial date is when the funding commitments for the acquisition expire, which will be close to the end of April 2019.
According to Rossman, a trial in February would provide the court sufficient time to decide while allowing time for an appeal.
He referred to Twitter’s suggested timeline as “unusual,” calling it “the idea of running this case in 60 days.” “This time frame is absurd.”
Rossman rejected Twitter’s claim that Musk is attempting to extend the time so the finance commitments expire. He said the day the firm filed suit, his client “continued to exercise his best endeavours to do the deal” by securing funding and having his attorneys stay in touch with Twitter about the specifics.
Given that Musk is Twitter’s second-largest shareholder, according to Rossman, “Mr Musk has no motivation to destroy Twitter.”
He ultimately failed to convince McCormick to refuse Twitter’s request for an expedited schedule.
The judge cut him off by citing a 2001 dispute between Tyson Foods Inc. and IBP Inc., which was settled three months before trial. Tyson try to back out of the $4.7 billion acquisition of its rival, but the Chancery judge, in that case, ordered Tyson to do so.
Rossman’s reference to a trial that took a year to complete and involved in private equity company Kohlberg’s attempt to back out of a $550 million purchase of cake supplier DecoPac Holdings was avoided by McCormick.
She noticed that as the epidemic approached, worries about the buyout began to see. Kohlberg was given the go-ahead to execute the deal by McCormick.
Delaware’s judges are seen as being able to solve the legal tangles of complex merger-and-acquisition issues, in contrast to other US courts. More than half of the nation’s publicly traded corporations have their corporate headquarters in Delaware.
In contrast to certain jurisdictions where it may take several years to reach trial, the Delaware Chancery Court often moves matters through more swiftly than many other state courts, with cases frequently being argued within five or six months.