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> What if the court orders Musk to close the deal and he says no? I can't believe people are taking this very silly statement seriously. This is utter nonsense

• hotpotamus 4y ago
  Anytime the idea of a wealth tax is brought up, I see commenters coming out of the woodwork to say that it would be impossible to actually collect it from the wealthy. Though I will note that it seems like we are able to collect yachts and planes from Russian oligarchs now, so perhaps our techniques have advanced in the last few months.
  • sascha_sl 4y ago
    There's an entire profession who's job it is to go full scale threat modeling on assets held directly or indirectly by the extremely rich. Seems likely they either didn't account for war sanctions or thought the impacted assets would not be worth putting behind 10 proxy legal owners for the unlikely case of such sanctions. Yachts and planes seem like they'd be particularly hard to turn into assets owned by a local proxy entity, since they move around so much.
  • nikanj 4y ago
    It’s easier to collect from foreign billionaires who don’t have the connections. Igor will probably not fund your re-election campaign, but Musk might.
  • throwaway09223 4y ago
    This is a different problem and has to do with privacy. The government can't compel you to disclose everything you're doing without cause, and without due process. Having a court ordered judgement entered against you is cause and is a result of due process. It's an entirely different scenario.
    • pc86 4y ago
      Assuming that a wealth tax was passed, wouldn't the cause here be proper reporting and collection of said tax? You can declare illegal income on your federal return and pay taxes on it. They're not (in this hypothetical I guess?) asking what you're doing, just how much it's made you.
      • throwaway09223 4y ago
        The issue is that people can change how they own things so they don't have to disclose. The law is necessarily public and people can adjust the way they structure ownership accordingly. We see this all the time already. For example, Medicaid won't pay for your extremely expensive end of life care if you have assets. So, people give away their assets (to a trust, to family) before applying for Medicaid to cover their nursing home. It becomes a game of cat and mouse. People will adjust where they can to avoid tax. This also already happens with income tax. For example, executive compensation is primarily provided as capital gains rather than income because it's much more tax efficient. Everything is in the open. The other issue here is one of cost. The IRS has to fund the cost of analyzing filings and deciding to audit. This is very different from a post-judgement scenario.
        • roenxi 4y ago
          And the added problem that the assets need to be valued to tax them - for liquid assets this will be much more challenging than income. Things like CGT or income tax happen at the same time as a transaction in dollars so they are easy to value. Wealth taxes would be open to gaming using the same process you describe here.
        • pc86 4y ago
          I don't think there's really any way around this. It just lowers the maximum amount you can extract via that tax. You have to tax at a rate low enough where it's not worth the expense to get around it in the first place. Maybe this is enough to make a wealth tax altogether not worth it federally (how much does it cost to set up a trust and transfer assets? can't be a lot), I don't know. But I think that's all part of the calculus of whether or not it's reasonable to institute the tax in the first place.
  • kolbe 4y ago
    Russian oligarch yacht seizures are a better argument for them than for you. They're worth tens of billions of dollars, and all the US can get is a nine figure boat.
    • azinman2 4y ago
      Don’t forget the homes in London, and the billions in frozen bank accounts. Aka everything not in Russia or China.
      • kolbe 4y ago
        So, 10% of their net worth by leveraging what was thought to be illegal and unexpected seizures? Most of which was done by the EU. Sounds like a ringing endorsement of how the US would implement a tax that the wealthy can prepare for and happens within the rule of law.
  • imgabe 4y ago
    Yachts and planes are physical objects and represent a tiny, tiny fraction of a billionaire's wealth. Wealth is actual ownership interest in valuable companies, which can be moved offshore or the person can renounce citizenship and relocate to a country with friendlier tax laws in the extreme case.
    • hawaiianbrah 4y ago
      Renouncing citizenship has something like a 20%-of-net-worth tax
      • imgabe 4y ago
        Might still be worth it if there were a significant wealth tax and you did it in advance of an IPO or other event that greatly increased your net worth. A wealth tax would also have the effect that people expecting to generate lots of wealth would just move somewhere else to do so, or not come to the US in the first place.
  • roenxi 4y ago
    The tax & plane seizures are 1. A surprising departure from the rules and norms - I assume probably illegal. 2. Part of a campaign designed to ruin Russia. You might have misunderstood the argument the anti-taxers (pro-property?) people are bringing up. There isn't a physical problem with taking wealth away from people, that part is very easy to execute. The problem is the 2nd order effects where it will turn into an unfair confiscation and do substantial damage to the ability of the host country to invest and prosper, bringing general ruin to us all. The fact that wealth confiscation is being deployed against Russians is no surprise from that perspective and not undermining the core argument. However, if it makes you feel better, I do agree that given that the War on Terror was pointed inwards fairly quickly I expect the techniques used in the War on Russia's Economy will also move to US home soil in the next decade and there may well be large scale wealth confiscation in the US.
    • jjeaff 4y ago
      What law prohibits the seizure of foreign assets on international waters?
      • roenxi 4y ago
        I dunno. I'm not a lawyer. Possibly one of the ones against piracy? If you want to make the argument that it is literal and raw might-makes-right on the high seas, ok. But that type of barbarian world is not one I encourage and it'd be a bit stunning to find someone who wants the world to work that way. The US wouldn't do well in a world like that either, US citizens have more assets to seize than foreigners do.
        • BoorishBears 4y ago
          There's a certain irony in picking this high horse to ride, when we're taking about the response to a western european ground-war in the year 2022. As if that's not evidence of far more barbaric mechanisms at play in geopolitics...
          • 4y ago
  • ByteJockey 4y ago
    Wait, is that what you always see as the argument against it? Whenever I've seen it brought up it's always that it would require a constitutional amendment (specifically in the US). The federal government isn't allowed to do taxes that way under the current system (Article 1 Clause 2 Section 3). Hell, the feds weren't even allowed to do a straight income tax until the 16th amendment.
    • hotpotamus 4y ago
      Washington thought it was fine https://www.npr.org/2019/09/12/760148148/episode-956-the-carriage-tax https://www.npr.org/2019/09/12/760148148/episode-956-the-car... Yes, I mostly see people saying that laws don't matter because billionaires are beyond law at this point. Who knows, perhaps that's astroturfing by troll teams employed by billionaires to try and discourage the masses. As you said, they've already got plenty of lawyers to work on it from the constitutional end - including 6 of the lawyers on the Supreme Court.
      • ByteJockey 4y ago
        > Yes, I mostly see people saying that laws don't matter because billionaires are beyond law at this point. Huh. Weird. Well, I don't see it brought up on HN all that often (once a month tops?), so we must hang out in different circles outside of here. Anyways, you have a good one.
• heartbreak 4y ago
  Levine’s take is based on how Musk’s previous encounters with court orders have gone.
  • throwaway09223 4y ago
    No, it isn't. It's completely disconnected from reality. There isn't even one single court imposed fine which he hasn't paid.
    • dragontamer 4y ago
      How goes his court ordered Twitter sitter that's supposed to prevent Musk from Tweeting about material effects related to Tesla? That's what I thought. Musk just ignores the law and gets away with things on a regular basis.
      • CamperBob2 4y ago
        That was a stupid order that would never survive scrutiny under prior-restraint doctrine. Specific performance is something different, though... I can't think of any constitutional problems that might block enforcement of that.
        • rurp 4y ago
          Musk and his lawyers agreed to the provision, and a court approved the deal. That is pretty strong evidence it's not an absurd provision.
          • CamperBob2 4y ago
            He has also violated it multiple times, with no sign of any consequences. That is pretty strong evidence that it was, at best, pointless.
    • slotrans 4y ago
      But he has agreed to SEC sanctions and then subsequently ignored them...
• daenz 4y ago
  >the court will take his assets to compensate. How do you seize billions of dollars of stock without affecting share prices?
  • pg_1234 4y ago
    You just continue seizing assets until the accumulated cash value realized from the sale of the assets matches the value of the financial judgement against the guilty party. The drop in share prices as you do this is not your concern.
  • almost_usual 4y ago
    Don’t invest in a company ran by a lunatic?
    • abirch 4y ago
      Twitter employees are watching the board force a lunatic to buy their company.
      • scaramanga 4y ago
        Because they know he has absolutely no ability to do so. They are simply trying to collect legal fees at this point.
        • bandyaboot 4y ago
          I mean, he does though right? It’s just that doing so at this point would cause a world of hurt for Tesla and its shareholders?
          • scaramanga 4y ago
            I don't think so, I mean, you are not just going to place a single market order for $44bn of stock, you are going to have liquidity problems because there is not that much buy-side volume in the market, so the price must fall drastically to attract new buyers. Also I assume musk has legal obligations not to do stuff like that to begin with, as an executive with fiduciary responsibilities to shareholders. If Musk can tank Tesla, Exxon execs can dismantle Exxon to save the environment. But there's also the fact that a lot of his Tesla shares are already leveraged on loans. The most likely course would be for him to take out loans on the remaining unleveraged stock, but he doesn't have enough of that at the rates the banks are offering. Anyway, I'm no expert on Musk, and I have almost zero interest in Tesla, or Twitter, or any of this clown show. So maybe my ballpark guesstimations of all the relevant numbers are way off. So take it all with a huge pinch of salt. I am just some uninformed spectator watching two lizards fight in the dust and speculating who will win or whatever :) Edit: leveraged -> unleveraged, woops
• dreamcompiler 4y ago
  Levine has addressed this in past columns. Of course the courts have such authority, but individual people have to enforce the court's decisions, and sometimes those people are reluctant to take on Musk. Musk is a special case because he has done things like threatening to ruin the careers of SEC lawyers who have come after him, and he has the power to make that happen. Is this illegal? Probably. Does Musk get away with it? Yes.
  • throwaway09223 4y ago
    You're talking about Musk pressuring Cooley to fire a lawyer who previously worked against him at the SEC. But the result was that Cooley told Musk no. Hardly a success story for Musk. There's no shortage of law firms willing to go up against billionaires. Hell, there's no shortage of firms willing to go up against criminal enterprises like drug cartels. The idea that Musk is somehow more threatening than the types that the US court system regularly puts under their thumb is simply laughable.
    • sroussey 4y ago
      Cooley then lost business from Musk firms.
      • throwaway09223 4y ago
        So what? This is business as usual for law firms. They will lose clients every time they take a case due to conflicts of interest and so on, even if everyone has a happy outcome. What Musk did was petty and questionable, but it didn't fundamentally change anything for Cooley. It's not a big deal.
        • rurp 4y ago
          It's unlikely Musk expected Cooley to cave to his ridiculous demand. It's very likely the intended target for this action was every person who deals with Musk's future illegal actions.
• paulcole 4y ago
  > Is Levine seriously suggesting that US courts don't have the authority to impose financial penalties, find liability, and seize assets No. He’s suggesting that Musk’s wealth and power will make the people who work in US courts reluctant to impose financial penalties, find liability, and seize assets.
  • scaramanga 4y ago
    Not to mention his bizarre hold on the public imagination. He's the worlds most simped compulsive liar. I think authorities may also be afraid of looking like Nazi jackboots on the neck of this innocent guy who would be in federal prison serving long sentences if he was just some obscure hedge fund dude, known only to other hedge fund dudes, like Bernie Madhoff.
    • kibwen 4y ago
      > He's the worlds most simped compulsive liar. Still a strong #2, but he sure is trying his hardest for that top spot.
      • myth_drannon 4y ago
        Who is number one?
        • paulcole 4y ago
          Has to be Trump.
• reverend_gonzo 4y ago
  Levine is suggesting that they don’t have the balls to enforce those penalties. And by history, he may very well be right.
• phillipcarter 4y ago
  Perhaps it's just a general sense of disillusionment, but I've come to see that "court orders X" and "X happens" are entirely orthogonal. I will be personally surprised if Musk pays a single cent.
  • smaudet 4y ago
    Depends I guess on how 007 you think the world operates (reference to James Bond) - X will happen, but maybe 2-10 years after various counter-suits. Case studies are what has happened e.g. with Microsoft, other large businesses - long legal battles are fought, nothing happens while things are in limbo. When the rubber finally hits the road, things happen fairly quickly, but until then it does look a bit like "nothing happens". This is of course, a problem, perhaps one that needs innovating around.
    • tambourine_man 4y ago
      What has happened to Microsoft? They still have a default browser pre-installed, Office wasn’t spun-off to another company… and I don’t remember the Java stuff anymore but I think nothing happened either, even though it’s a lot less relevant now.
      • brianwawok 4y ago
        The stuff stuff made them spin off C#, which likely made them more money
• 082349872349872 4y ago
  Note that in TFA, the continuation of this very silly statement is footnoted [6], which literally starts with "I made this joke before...", so none of us ought to be taking it seriously.
  • majormajor 4y ago
    The footnote only applies to the "Chancery jail" bit, not the suggestion that the court may not want to risk a public showdown: "A showdown between Musk and a judge might undermine Delaware corporate law more than letting him weasel out of the deal would." - this sentence is after that footnote.
• mise_en_place 4y ago
  Ok let’s say he has a bunch of stock as well as paintings, cars, etc. how do you divvy that up? Cut the painting in half and give it to Twitter? The rich are very wise at hiding money in assets that cannot be evenly divided nor distributed. That’s why the vast majority of taxes in the US comes from the middle class, they usually sit on piles of cash and have salaries from which to levy fines to.
  • aunty_helen 4y ago
    Or ya no, liquidate the asset and divvy up the cash. I'm sure you could've thought of that.
    • mise_en_place 4y ago
      That will take years and Elon could easily stall them out in court.
      • brutusborn 4y ago
        Auctions don't usually take years :P
  • carpo 4y ago
    You sell it for money
  • blibble 4y ago
    auction
  • jmccaf 4y ago
    Most of the middle class in America has a salary, or at least a paycheck, but distressing little cash saved. But they do pay the taxes that pay the bills.
• kolbe 4y ago
  Well, throwaway09223, you certainly sound like as much an authority as a former Wachtell and Goldman Sachs associate. Strong arguments like "this is utter nonsense" and "this is so absurd [that I can't actually argue against it]" are sure to sway the educated crowd on HN. If you would like to go see ways in which the government fails to penalize powerful entities, look no further than the financial crisis fines. What you were told were 10 figure fines ended up becoming a few million dollars in consumer relief headaches
• jjav 4y ago
  > There are remedies for people who disobey court orders. There are remedies for people like you and me and most people who disobey court orders. You can observe time and again that for those who are well connected and have some billions, the concept of law is far more malleable.
  • iab 4y ago
    More malleable, or just literal putty
  • b112 4y ago
    Even if what you say is true (it isn't), this is a battle between billionaires, eg the board and large stockholders @ twitter.
• zackees 4y ago
  Why would the court force Elon to buy the company when the remedy in the contract is a one billion payout?
  • majormajor 4y ago
    It appears that that's the remedy for failing to get funds, not for cold feet; there's a performance clause for the latter, so Levine suggests "Musk’s goal here is presumably to walk away from Twitter and pay only $1 billion in damages." - that Musk is negotiating by making a stink to even be able to pay instead of going through with the deal he signed.
    • zackees 4y ago
      Your repeating opinion of someone with extreme biases for clickbait. This fantasy of forcing musk to buy the company doesn’t exist in any contract. Your asking the court to make up a new contract and enforce it. That’s not how the court works, except in extreme circumstances which don’t apply to this twitter acquisition attempt. Also, Musk asserts that upto 50% of twitter users are bots, which is totally believable. So the chances Musk will have to pay anything is actually remote, since twitter would have to produce evidence that would reveal trade secrets. Here’s my prediction: Musk will pay nothing because Twitter has allowed itself to be infiltrated with bots and revealing this will be far more damaging than losing out on a billion. Musk will walk away.
      • FabHK 4y ago
        > This fantasy of forcing musk to buy the company doesn’t exist in any contract. That is precisely what the merger agreement is: a contract forcing Musk to buy Twitter.
• codesections 4y ago
  > This is such an absurd thing [for Matt Levine, a former 3rd Circuit clerk, Yale Law grad, and Wachtell M&A attorney] to say it's hard to find a way to charitably respond. If your interpretation of the post suggests that a highly qualified attorney is getting the basics of US law absurdly incorrect, you might want to reconsider whether you're understanding the intended meaning. (Here, Levine is making a specific claim about the remedies that the Delaware chancellory court typically employs, not about the authority of US courts)
  • XorNot 4y ago
    This is an appeal to authority that is not valid: there are plainly a lot of lawyers out there who's legal opinion leaves a lot of daylight against the actual law. Rudy Giuliani took a long time to get disbarred.
    • codesections 4y ago
      > This is an appeal to authority that is not valid I'm open to that criticism; I'm typically pretty skeptical of appeals to authority myself. But to be clear: the appeal to authority I'm making isn't "legal opinion of a lawyer" (I agree that's very weak) but rather "opinion on corporate law by a Wachtell attorney who practiced corporate law" (Wachtell is probably the best corporate law firm in the world, and clearly in the top handful)
      • wutbrodo 4y ago
        And in the example the parent comment gave: RUDY Guiliani was a US Attorney and the Associate Attorney General (third highest position in the DoJ).
• avalys 4y ago
  From the Wall Street Journal this afternoon: "“What are they going to do if there is a judgment and he says, ‘Well, I’m still not going to buy it’?” said Zohar Goshen, professor of transactional law at Columbia Law School. “They don’t really have tools to force him to go through with it. You don’t put people in jail because they don’t buy something.”" https://www.wsj.com/articles/twitter-elon-musk-set-for-unprecedented-legal-battle-over-deal-collapse-11657404303?mod=hp_lead_pos1 https://www.wsj.com/articles/twitter-elon-musk-set-for-unpre...
  • genocidicbunny 4y ago
    No, but if the court orders it and he refuses, can that not be construed as contempt of court? People definitely go to jail for that.
    • b112 4y ago
      That's criminal, not civil court. Civil court works on fiscal, property to mitigate damage. If he is found to breach contract, a court could order seizure of assets (cash or property). There could be punitive damages assessed too, if his actions are seen as purposefully malign.
      • phrz 4y ago
        Are you under the impression that judges presiding over civil cases cannot exercise their inherent power (in some jurisdictions) to jail those in (severe) contempt of court?
        • b112 4y ago
          To both replies, I agree contempt of court is a thing. I misspoke. What I mean is, the remedy for non-compliance with contracts, is fiscal, seizure, penalties of thus nature. The goal of civil court is not the state punishing, but instead, laying out compensation, for damages, to the harmed. There is no contempt of court for not paying these damages.
• gnicholas 4y ago
  If he had the cash to buy it, they could force him to. But if he lined up financing and those people bail, what then? Would the court make him liquidate all his Tesla stock, without regard to how that would injure other Tesla shareholders? Having assets does make one more vulnerable to court judgments, but savvy birch people will set themselves up to remain in the driver’s seat when possible.
• kortilla 4y ago
  > There are remedies for people who disobey court orders. A Delaware court doesn’t have as much reach as you might think if most of Musk’s assets are not there.
  • b112 4y ago
    Good lord, registering judgements in jurisdictions is trivial. Not to mention, how many corporations which Musk has shares in, are Delaware companies? All of this, how to assess and collect damages, goes back to Roman law.
• benreesman 4y ago
  To the extent that Elon Musk might represent a corner case w.r.t. the legal system even more than you’re average billionaire it would most likely be because of the national security tie-ins around SpaceX. This is pure speculation on my part, but I don’t think it’s insane.
• phendrenad2 4y ago
  I can't believe people are looking at this from such a silly angle. It's obvious that no court can order you to buy something. That goes against the personal freedom we have in this country, and if a court tried it, it would be an easy appeal. But that misses the point, because nobody is going to order Elon to buy Twitter. What MIGHT happen is, a court declares "Congratulations! You already bought Twitter! It has nothing to do with us, we just interpreted the contract. Again, congrats on your purchase, don't go getting buyer's remorse now winky face"
  • striking 4y ago
    What are you trying to assert is false about this viewpoint? Specific performance is actually a kind of legal remedy and it can in fact be ordered by a court. It might be one of the last tools in a judge's toolbox, but I don't think it's anywhere near a "silly angle" after a quick googling of "specific performance".
  • sk5t 4y ago
    > It's obvious that no court can order you to buy something. A court can compel "specific performance" if the contract's terms require it.