[The Epoch Times July 15, 2022](The Epoch Times reporter Daphra comprehensive report) Twitter Inc. filed a lawsuit against Musk to terminate the $44 billion acquisition deal. Human buyer completes the transaction.
Kathaleen McCormick took over as chief justice of the Delaware Court of Chancery last year, the first woman to hold the position. On Wednesday (July 13), McCormick was assigned to Twitter Inc’s lawsuit against Musk.
Musk said on Friday (8th) that he would end its $54.20 per share acquisition of Twitter, valued at $44 billion. Twitter filed a lawsuit on Tuesday.
McCormick is one of only a handful of judges who have ordered buyers who want to leave in the middle of a takeover to close their deal, according to legal experts and court records.
McCormick caught the attention of Wall Street last year when he ordered an affiliate of private equity firm Kohlberg to complete its $550 million acquisition of DecoPac, a maker of cake-decorating products.
She described her ruling as a “victory to seal the deal” and dismissed Kohlberg’s argument that it went away for lack of funding.
The case shares many similarities with the Twitter deal. Like Musk, Kohlberg said the deal was terminated because DecoPac violated the merger agreement, and Kohlberg partly believes DecoPac failed to maintain normal operations.
But the two cases are also different. Musk’s Twitter deals are larger, involve publicly traded companies (Twitter) and could have an impact on electric car maker Tesla Inc, the source of much of Musk’s wealth.
In other cases, when shareholders clashed with management, McCormick sided with shareholders.
Last year, she blocked a so-called poison pill takeover by energy company The Williams Cos Inc, saying it breached their fiduciary duty to shareholders.
Last month, she said Carvana Co’s shareholders could sue the board for issuing shares directly to select investors when the stock price was low early in the pandemic. Carvana Co is a holding company, an e-commerce platform for buying used cars.
A graduate of the University of Notre Dame School of Law, McCormick began her career with the Delaware chapter of the Legal Aid Society, which provides legal assistance to low-income individuals. She joined the Delaware Chancery Court in 2018 and last year became the first woman to lead the court.
Like many U.S. businesses, Twitter Inc. is registered in Dover, Delaware. Many U.S. public companies, including roughly two-thirds of the Fortune 500, are incorporated in Delaware, and while the state’s business-friendly tax system is an important reason, its balance of jurisdiction over corporate law Courts are another reason.
The court was established in 1792 to deal with “corporate matters, trusts, estates and other trust matters, disputes involving the sale and purchase of land, real estate ownership issues, and general commercial and contractual matters”.
In the lawsuit, Twitter asked the Delaware Chancery Court to order the defendants — Musk and the two companies he formed for the acquisition — to close the deal.
Experts say business groups may prefer to litigate in the Court of Chancery because they know that judges know the ins and outs of corporate law, are very familiar with case law and can handle cases in complex, efficient ways.
Under Delaware law, Musk has 20 days to respond to the lawsuit. In a separate filing, Twitter called for an accelerated timeline, saying any delays would hurt the company and its shareholders.
Twitter wants Musk’s lawyers until July 18 to respond to the lawsuit, and has proposed a four-day trial with a September 19 start date.
In the original agreement, Musk and Twitter agreed to close the deal by Oct. 24.
Responsible editor: Lin Yan#