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Judge Allows Twitter to Expedite Lawsuit Against Musk

54 points by abduhl 4y ago

fooey 4y ago
https://twitter.com/chancery_daily https://twitter.com/chancery_daily has had some great live tweeting of the hearing today, but I would hazard this tweet paraphrasing the ruling is the most significant > The Court: In this case, Twitter seeks specific performance, and it is not at all apparent that damages could constitute a sufficient remedy to Twitter. https://twitter.com/chancery_daily/status/1549433272656187394 https://twitter.com/chancery_daily/status/154943327265618739... That's the judge implying that the remedy could very well be a forced completion of the purchase
- tptacek 4y ago
  That'll be the official, legal remedy; what seems most likely is that once Twitter obtains that remedy, they'll settle with Musk, who will in fact pay damages.
  - parkingrift 4y ago
    Why would Twitter settle with Musk after they win specific performance in court?
    - leereeves 4y ago
      To avoid a long appeals process. After the 2010 Deepwater Horizon oil spill, BP dragged the legal process out for over five years. And this dispute, while involving similar amounts of money, doesn't seem to have the same moral urgency to speed it along.
      - parkingrift 4y ago
        Completely different type of lawsuit, and in a completely different court. There is decades of precedence here. It takes doesn’t take long to decide these cases, and the appeals are quick. This will all be over before the end of the year.
    - toomuchtodo 4y ago
      To prevent ownership by someone who doesn't want to own you. That leads to ruin.
      - Cederfjard 4y ago
        This is the board and shareholders. They wouldn’t be ”you” anymore after they sell. Why would they care about what happens to Twitter after they’ve gotten their money?
        toomuchtodo 4y ago
        My thesis is that while $1B isn't enough for Twitter to walk away, there are likely enough shareholders who want the enterprise to continue after taking a settlement (between $1B and $44B) due to ongoing value creation that a settlement is more likely. Could shareholders be satisfied to take $44B to then incinerate Twitter with Musk owning it privately? I suppose that is possible, but doesn't feel like the narrative from majority shareholders (based on what was public during earlier events). People and motives are tricky!
      - extheat 4y ago
        That would lead to more shareholder lawsuits. The $54.20 cash deal is like a golden carrot on a stick, seeing what happened to Snap and the cloudy economic outlook means they would tank in value if Musk sells his shares. They have no choice but to accept it.
        kevinventullo 4y ago
        I could imagine them settling on Musk paying a penalty of the difference between $54.20 and the current price, and then immediately distributing that penalty to each shareholder (including Musk!). Or maybe a smaller penalty in combination with Musk forfeiting his current shares which would be a kind of “buyback” to help make the shareholders whole.
        extheat 4y ago
    - moralestapia 4y ago
      (Warning: speculation) Because a sentence and how it is carried out are two (sometimes wildly) different things. Musk could lose the case and still drag the actual execution of his obligations for years. Levine pointed out yesterday that some of the agreements Musk has in place to fund this operation will expire on April 2023, so he could wait until that date and say "whoops, I can't afford it now". I have no idea if that would stick but this case has been unusual since day zero. The most important thing for Twitter is to get out of this mess, honestly, the sooner the better.
      - fooey 4y ago
        I believe something around $30b of the $44b is backed personally by Musk Basically all of Musks "money" is in the US, and much of it is even in Delaware Corporations. The judge can very easily extract whatever it takes from Musk if it comes to that.
        moralestapia 4y ago
        It goes like this: * 13B from a party of banks (i.e. Morgan Stanley and friends), in exchange for who knows what (private equity?) * 12.5B from pretty much the same party of banks but as a loan that takes Musk's TSLA stock as collateral * 21B from Musk itself (idk under what conditions) So he could easily "not afford it" if he wanted to.
        deleted 4y ago
        [deleted]
        AnimalMuppet 4y ago
        Courts take a real dim view of that kind of game. When a billionaire "can't afford" to pay a court judgment, the courts don't just shrug and say "stuff happens". They know when they're being played, and they can play back a lot harder than Musk can.
        TheCoelacanth 4y ago
        That's how he planned to finance it, but I don't see why a court would limit itself to those assets. Unless his net worth drops by about 75%, he can afford it.
    - xenadu02 4y ago
      It is highly likely that Musk's financing will pull out if they haven't already. The market is down so the value of his existing wealth has dropped. Musk may not have the resources to close the deal. If they force him into bankruptcy they aren't going to get $44b. They might have a number in mind that they're aiming for to back away - say $10b. They might also have him agree not to start a potential competitor for 10 years. On the flip side they might think the markets will remain down for some time and the premium price is worth going full scorched earth on Musk. In that case he'll have to eat some punitive financing costs or file bankruptcy - most likely the latter because I can't see him giving up his stake in Tesla and SpaceX.
      - rurp 4y ago
        The financing is already committed, the banks don't have any more right break a contract for convenience than Musk or Twitter do. > If they force him into bankruptcy they aren't going to get $44b. Why not? He appears to still have the non-financed amount well covered by his Tesla, SpaceX, and other assets. Even if markets implode much further they'll still be able to recoup much more than the $1B cost Musk is hoping to get away with.
      - ksherlock 4y ago
        If the financing pulls out, the acquisition is canceled and there's a $1 billion termination fee. As described above, if the conditions to Parent’s and Acquisition Sub’s obligations to complete the Merger are satisfied and Parent fails to consummate the Merger as required pursuant to the Merger Agreement, including because the equity, debt and/or margin loan financing is not funded, Parent will be required to pay Twitter a termination fee of $1.0 billion.
    - tptacek 4y ago
      Because they'll get both money and Twitter's assets, and there is some number between $1B and $44B where Twitter will be happy to have both. Twitter isn't worth $44B right now, but, contra message board takes, it's also not worth close to $0.
  - cuteboy19 4y ago
    Good deal for shareholders right? Don't give up ownership of Twitter and net 10-15 Billion $ for free
    - Cederfjard 4y ago
      Not necessarily compared to netting $44bn, though. I guess it depends on how long they think it’ll take for Twitter to reach that price again, if ever.
    - nocoiner 4y ago
      It might turn out to be a good deal for the shareholders, but good lord, I would not want to be one of the Twitter board members who agrees to a settlement offer. This guy owes your shareholders $44 billion! And you’re going to take less than that?! Now, that said, there are likely to be good commercial, legal and practical reasons for them to settle this case, even if they win on specific performance. But the optics are terrible for Twitter’s board, and they’re all gonna get raked over the coals in the forthcoming shareholder litigation (which in inevitable regardless of how this winds up playing out).
      - kadoban 4y ago
        That seems a little skewed. Musk owes $X billion, and _gets the company_. If Musk gives some smaller amount of money, though still several billion, but the shareholders still own the company, that's not going to be too hard to sell as a win.
        Cederfjard 4y ago
        The amount would have to be close to the difference between the price he would pay and the current value of the company, at which point Musk might as well go through with it, if he really thinks he can run it better.
        kadoban 4y ago
        Seems like there's probably some number in the middle that should satisfy both sides, since Musk really seems like he doesn't want to own Twitter now, apparently. I guess we'll see. Anyway though, I personally don't see it as being that hard to defend pretty much any probable outcome, as the Twitter board.
- deleted 4y ago
  [deleted]
krallja 4y ago
I love how one of the replies to this tweet (when I looked) is a crypto touting bot. Hopefully that’s not counted as a mMAU!
srvmshr 4y ago
I hope this is a worthy & commensurate lesson for Elon Musk, who has been recklessly playing with the stock markets, flouting norms & trying to be an iconoclast in the not-so-benevolent way. Sometimes, hard lessons are necessary. More: https://www.bloomberg.com/opinion/articles/2022-07-19/let-s-hope-twitter-beats-elon-musk-in-court-and-quickly https://www.bloomberg.com/opinion/articles/2022-07-19/let-s-...
- melony 4y ago
  It's only a bad deal if the stock market does not recover by the time he has to complete the transaction. At his scale, he can afford to drag out the deal for another few months and save money. If the tech bubble reinflates, then this deal is bad for Twitter.
  - Ekaros 4y ago
    Only really if Twitter would trend to go over the offered price. Which I doubt.
    - melony 4y ago
      Not necessarily, if the market bounces back the funding becomes cheap.
  - Scarbutt 4y ago
    A few months? with a recession coming?
  - kadoban 4y ago
    If that's what Musk is betting on, he might as well just complete the sale now. I don't think there's anything reasonable to judge the deal by except the _current_ worth, unless there's some good reason to expect it to move one way or the other.
- LegitShady 4y ago
  Elon Musk doesn't know you exist and doesn't care what you think about him. Pretending that being sued is the same thing as losing isn't honest. Musk alleges twitter didn't keep to the terms of their agreement and it will come out in court how true this all is. It's not worth having a personal opinion of what people you dont know deserve when their crime is "involved in a business deal you don't approve of".
gfrff 4y ago
I think the right remedy are damages. It's simple. Musk should pay the difference between his offering price and Twitter's current market cap.
- advisedwang 4y ago
  > By most readings of the contract, damages for the deal are capped at $1 billion Src: https://www.nytimes.com/2022/07/11/business/dealbook/elon-musk-twitter-deal-lawsuit.html https://www.nytimes.com/2022/07/11/business/dealbook/elon-mu...
  - moralestapia 4y ago
    The Twitter lawsuit against Elon is a different thing than the acquisition contract they agreed on. The damages that Twitter can claim from this new lawsuit are not bound by the clauses of said contract. Although, in this case, they just want the deal to go forward, at any moment Twitter could say "your marketing stint, or whatever that was, has cost us $X billion and we want compensation for that" and they have grounds for it.
decremental 4y ago
I hope that whatever happens it ends with the total destruction of Twitter. I'm glad that it's getting expedited because this is great content.
- extheat 4y ago
  There’s a good saying, delete Twitter, and productivity will sky rocket.
- Ekaros 4y ago
  I also would love to see Musk and Tesla to crash. Entirely deservedly.
  - decremental 4y ago
    That's fine too. I don't care about anyone involved in this.

54 points by abduhl 4y ago

https://twitter.com/chancery_daily https://twitter.com/chancery_daily has had some great live tweeting of the hearing today, but I would hazard this tweet paraphrasing the ruling is the most significant > The Court: In this case, Twitter seeks specific performance, and it is not at all apparent that damages could constitute a sufficient remedy to Twitter. https://twitter.com/chancery_daily/status/1549433272656187394 https://twitter.com/chancery_daily/status/154943327265618739... That's the judge implying that the remedy could very well be a forced completion of the purchase

tptacek 4y ago
That'll be the official, legal remedy; what seems most likely is that once Twitter obtains that remedy, they'll settle with Musk, who will in fact pay damages.
- parkingrift 4y ago
  Why would Twitter settle with Musk after they win specific performance in court?
  - leereeves 4y ago
    To avoid a long appeals process. After the 2010 Deepwater Horizon oil spill, BP dragged the legal process out for over five years. And this dispute, while involving similar amounts of money, doesn't seem to have the same moral urgency to speed it along.
    - parkingrift 4y ago
      Completely different type of lawsuit, and in a completely different court. There is decades of precedence here. It takes doesn’t take long to decide these cases, and the appeals are quick. This will all be over before the end of the year.
  - toomuchtodo 4y ago
    To prevent ownership by someone who doesn't want to own you. That leads to ruin.
    - Cederfjard 4y ago
      This is the board and shareholders. They wouldn’t be ”you” anymore after they sell. Why would they care about what happens to Twitter after they’ve gotten their money?
      - toomuchtodo 4y ago
        My thesis is that while $1B isn't enough for Twitter to walk away, there are likely enough shareholders who want the enterprise to continue after taking a settlement (between $1B and $44B) due to ongoing value creation that a settlement is more likely. Could shareholders be satisfied to take $44B to then incinerate Twitter with Musk owning it privately? I suppose that is possible, but doesn't feel like the narrative from majority shareholders (based on what was public during earlier events). People and motives are tricky!
    - extheat 4y ago
      That would lead to more shareholder lawsuits. The $54.20 cash deal is like a golden carrot on a stick, seeing what happened to Snap and the cloudy economic outlook means they would tank in value if Musk sells his shares. They have no choice but to accept it.
      - kevinventullo 4y ago
        I could imagine them settling on Musk paying a penalty of the difference between $54.20 and the current price, and then immediately distributing that penalty to each shareholder (including Musk!). Or maybe a smaller penalty in combination with Musk forfeiting his current shares which would be a kind of “buyback” to help make the shareholders whole.
        extheat 4y ago
  - moralestapia 4y ago
    (Warning: speculation) Because a sentence and how it is carried out are two (sometimes wildly) different things. Musk could lose the case and still drag the actual execution of his obligations for years. Levine pointed out yesterday that some of the agreements Musk has in place to fund this operation will expire on April 2023, so he could wait until that date and say "whoops, I can't afford it now". I have no idea if that would stick but this case has been unusual since day zero. The most important thing for Twitter is to get out of this mess, honestly, the sooner the better.
    - fooey 4y ago
      I believe something around $30b of the $44b is backed personally by Musk Basically all of Musks "money" is in the US, and much of it is even in Delaware Corporations. The judge can very easily extract whatever it takes from Musk if it comes to that.
      - moralestapia 4y ago
        It goes like this: * 13B from a party of banks (i.e. Morgan Stanley and friends), in exchange for who knows what (private equity?) * 12.5B from pretty much the same party of banks but as a loan that takes Musk's TSLA stock as collateral * 21B from Musk itself (idk under what conditions) So he could easily "not afford it" if he wanted to.
        deleted 4y ago
        [deleted]
        AnimalMuppet 4y ago
        Courts take a real dim view of that kind of game. When a billionaire "can't afford" to pay a court judgment, the courts don't just shrug and say "stuff happens". They know when they're being played, and they can play back a lot harder than Musk can.
        TheCoelacanth 4y ago
        That's how he planned to finance it, but I don't see why a court would limit itself to those assets. Unless his net worth drops by about 75%, he can afford it.
  - xenadu02 4y ago
    It is highly likely that Musk's financing will pull out if they haven't already. The market is down so the value of his existing wealth has dropped. Musk may not have the resources to close the deal. If they force him into bankruptcy they aren't going to get $44b. They might have a number in mind that they're aiming for to back away - say $10b. They might also have him agree not to start a potential competitor for 10 years. On the flip side they might think the markets will remain down for some time and the premium price is worth going full scorched earth on Musk. In that case he'll have to eat some punitive financing costs or file bankruptcy - most likely the latter because I can't see him giving up his stake in Tesla and SpaceX.
    - rurp 4y ago
      The financing is already committed, the banks don't have any more right break a contract for convenience than Musk or Twitter do. > If they force him into bankruptcy they aren't going to get $44b. Why not? He appears to still have the non-financed amount well covered by his Tesla, SpaceX, and other assets. Even if markets implode much further they'll still be able to recoup much more than the $1B cost Musk is hoping to get away with.
    - ksherlock 4y ago
      If the financing pulls out, the acquisition is canceled and there's a $1 billion termination fee. As described above, if the conditions to Parent’s and Acquisition Sub’s obligations to complete the Merger are satisfied and Parent fails to consummate the Merger as required pursuant to the Merger Agreement, including because the equity, debt and/or margin loan financing is not funded, Parent will be required to pay Twitter a termination fee of $1.0 billion.
  - tptacek 4y ago
    Because they'll get both money and Twitter's assets, and there is some number between $1B and $44B where Twitter will be happy to have both. Twitter isn't worth $44B right now, but, contra message board takes, it's also not worth close to $0.
- cuteboy19 4y ago
  Good deal for shareholders right? Don't give up ownership of Twitter and net 10-15 Billion $ for free
  - Cederfjard 4y ago
    Not necessarily compared to netting $44bn, though. I guess it depends on how long they think it’ll take for Twitter to reach that price again, if ever.
  - nocoiner 4y ago
    It might turn out to be a good deal for the shareholders, but good lord, I would not want to be one of the Twitter board members who agrees to a settlement offer. This guy owes your shareholders $44 billion! And you’re going to take less than that?! Now, that said, there are likely to be good commercial, legal and practical reasons for them to settle this case, even if they win on specific performance. But the optics are terrible for Twitter’s board, and they’re all gonna get raked over the coals in the forthcoming shareholder litigation (which in inevitable regardless of how this winds up playing out).
    - kadoban 4y ago
      That seems a little skewed. Musk owes $X billion, and _gets the company_. If Musk gives some smaller amount of money, though still several billion, but the shareholders still own the company, that's not going to be too hard to sell as a win.
      - Cederfjard 4y ago
        The amount would have to be close to the difference between the price he would pay and the current value of the company, at which point Musk might as well go through with it, if he really thinks he can run it better.
        kadoban 4y ago
        Seems like there's probably some number in the middle that should satisfy both sides, since Musk really seems like he doesn't want to own Twitter now, apparently. I guess we'll see. Anyway though, I personally don't see it as being that hard to defend pretty much any probable outcome, as the Twitter board.
deleted 4y ago
[deleted]

krallja 4y ago

I love how one of the replies to this tweet (when I looked) is a crypto touting bot. Hopefully that’s not counted as a mMAU!

srvmshr 4y ago

I hope this is a worthy & commensurate lesson for Elon Musk, who has been recklessly playing with the stock markets, flouting norms & trying to be an iconoclast in the not-so-benevolent way. Sometimes, hard lessons are necessary. More: https://www.bloomberg.com/opinion/articles/2022-07-19/let-s-hope-twitter-beats-elon-musk-in-court-and-quickly https://www.bloomberg.com/opinion/articles/2022-07-19/let-s-...

melony 4y ago
It's only a bad deal if the stock market does not recover by the time he has to complete the transaction. At his scale, he can afford to drag out the deal for another few months and save money. If the tech bubble reinflates, then this deal is bad for Twitter.
- Ekaros 4y ago
  Only really if Twitter would trend to go over the offered price. Which I doubt.
  - melony 4y ago
    Not necessarily, if the market bounces back the funding becomes cheap.
- Scarbutt 4y ago
  A few months? with a recession coming?
- kadoban 4y ago
  If that's what Musk is betting on, he might as well just complete the sale now. I don't think there's anything reasonable to judge the deal by except the _current_ worth, unless there's some good reason to expect it to move one way or the other.
LegitShady 4y ago
Elon Musk doesn't know you exist and doesn't care what you think about him. Pretending that being sued is the same thing as losing isn't honest. Musk alleges twitter didn't keep to the terms of their agreement and it will come out in court how true this all is. It's not worth having a personal opinion of what people you dont know deserve when their crime is "involved in a business deal you don't approve of".

gfrff 4y ago

I think the right remedy are damages. It's simple. Musk should pay the difference between his offering price and Twitter's current market cap.

advisedwang 4y ago
> By most readings of the contract, damages for the deal are capped at $1 billion Src: https://www.nytimes.com/2022/07/11/business/dealbook/elon-musk-twitter-deal-lawsuit.html https://www.nytimes.com/2022/07/11/business/dealbook/elon-mu...
- moralestapia 4y ago
  The Twitter lawsuit against Elon is a different thing than the acquisition contract they agreed on. The damages that Twitter can claim from this new lawsuit are not bound by the clauses of said contract. Although, in this case, they just want the deal to go forward, at any moment Twitter could say "your marketing stint, or whatever that was, has cost us $X billion and we want compensation for that" and they have grounds for it.

decremental 4y ago

I hope that whatever happens it ends with the total destruction of Twitter. I'm glad that it's getting expedited because this is great content.

extheat 4y ago
There’s a good saying, delete Twitter, and productivity will sky rocket.
Ekaros 4y ago
I also would love to see Musk and Tesla to crash. Entirely deservedly.
- decremental 4y ago
  That's fine too. I don't care about anyone involved in this.