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Why is Elon Musk in court today?


Elon Musk will be forced into a hearing today to fast-track a trial against Twitter.

The case – Twitter v. Musk, 22-0613 – in Delaware Chancery Court comes in the wake of Mr Musk’s attempt to pull out of his purchase of Twitter.

Delaware Chancery Court Chief Judge Kathaleen St. J. McCormick said in a letter Thursday that Twitter’s call for “expedition” of its case will be heard in a Wilmington courtroom.

The session will go on for 90 minutes, and starts at 4:00pm GMT.

If Twitter is successful, the non-jury trial will take place 19 September.

Why is Twitter taking Elon Musk to court?

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

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

Twitter filed to sue Elon Musk last week, arguing the tech billionaire is legally bound to carry out his $44bn acquisition of the social network, after the Tesla chief executive said he wanted to walk away from the deal.

Twitter argued leaving the deal now is “invalid and wrongful”, saying that Mr Musk “apparently believes that he —unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”

Mr Musk’s claimed reasons for walking away from the deal is that Twitter did not give him information about fake accounts and spam bots on the platform.

“Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information,” Mr Musk’s attorney said in a letter to the Twitter board.

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

Who is likely to win?

The outcome of the trial is unclear; while there is a $1bn forfeit fee – to be paid by either Twitter or Mr Musk depending on who walks away from the deal – Twitter will be angling for much more than that penalty.

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

Mr Musk also has made “increasingly baroque requests” to Twitter with regards to its bot data, according to Bloomberg analyst Matt Levine.

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

What happens if Elon Musk does not buy Twitter?

In the unusual scenario where Mr Musk refuses to buy Twitter despite enforcement from a judge, he could be held “in contempt and set a daily fine until he complies,” Brian Quinn, a Boston College law professor who teaches about mergers-and-acquisitions law, told Bloomberg. “For Musk, that would have to be a rather large number.”

Tesla is also a Delaware corporation, which would give the court the power to go after Mr Musk’s stock options. However, no situation like that has ever happened before.


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