Saturday, August 6, 2022

Why is Elon Musk in court today?

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Elon Musk is being forced into a hearing today to speed up a trial against Twitter.

The case – Twitter v. Musk, 22-0613 – in Delaware Chancery Court follows Mr Musk’s attempt to withdraw from his purchase of Twitter.

Kathaleen St. J. McCormick, presiding judge of the Chancery Court in Delaware, said in a letter Thursday that Twitter’s call for the “expedition” of his case will be heard in a courtroom in Wilmington.

The session lasts 90 minutes and starts at 16:00 GMT.

If Twitter is successful, the trial will take place without a jury on September 19.

Mr Musk bought 9.2 per cent of the company, which is worth nearly $3 billion (£2.3 billion), on April 4, 2022.

The following day, Mr Musk said he would join the company’s board of directors. After six days, Mr. Musk reversed his decision before making an offer to buy the entire company on April 14. In May, however, Mr Musk began raising questions about the number of bot accounts on the platform — although he said in the April press release that he was buying Twitter to deal with the spam bots.

Twitter last week filed a lawsuit against Elon Musk, arguing the tech billionaire is legally required to go ahead with his $44 billion acquisition of the social network after the Tesla boss said he wanted to back out of the deal.

Twitter argued that it was “invalid and unlawful” to walk out of the deal now, saying that Mr Musk “apparently believes that, unlike any other party subject to Delaware contract law, he is free to speak his mind.” change, ruin the company, disrupt its operations, destroy shareholders and walk away.”

Mr Musk claimed to be getting out of the deal that Twitter had not given him any information about fake accounts and spam bots on the platform.

“Twitter failed or refused to provide this information. At times, Twitter has ignored Mr Musk’s requests, at other times it has refused them for seemingly unjustified reasons, and at other times it has claimed to comply while giving Mr Musk incomplete or unusable information,” Mr Musk’s attorney said in a letter on Twitter board.

Twitter then filed with the Delaware Chancery Court. Mr Musk responded to the news via a tweet: “Oh the irony lol”.

The outcome of the process is unclear; While there’s a $1 billion forfeiture fee — to be paid by either Twitter or Mr. Musk, depending on who’s going out of business — Twitter will seek much more than that penalty.

“If I sign an airtight contract to buy your car, and you show up with the car and I don’t show up with the money, and [you can] I’m only getting $10,000 for the car and I agree to buy it for $25,000, I owe you $15,000,” Professor Scott Galloway said pivot point.

Mr Musk has also made “increasingly baroque requests” regarding his bot data, according to Twitter Bloomberg Analyst Matt Levine.

Mr Musk had previously claimed the company was trying to “resist and thwart” his information rights, and in response, Twitter gave him access to real-time data, including API information. “It’s hard to imagine a judge here being sympathetic to Musk,” writes Mr. Levine.

In the unusual scenario where Mr. Musk refuses to buy Twitter despite being enforced by a judge, he “could be despised and fined daily until he complies,” Brian Quinn, a law professor at Boston College that teaches about mergers and acquisitions law, Bloomberg said. “For Musk, that would have to be a pretty big number.”

Tesla is also a Delaware company, which would give the court the power to pursue Mr Musk’s stock options. However, such a situation has never happened.

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