WILMINGTON, Del., July 13 (Reuters) – Twitter Inc (TWTR.N) has sued Elon Musk to pressure him to undergo with the $44 billion acquisition of the social media firm. learn extra What occurs if Twitter succeeds and the world’s richest man, who repeatedly taunts securities regulators, refuses to adjust to the court docket order?
CAN A COURT ORDER MUSK TO BUY TWITTER?
Twitter is asking a Delaware court docket to grant “particular efficiency” underneath the phrases of its contract with Musk – in different phrases, pressure him to finish the acquisition on the agreed worth of $54.20 a share.
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The court docket has issued such orders earlier than. Rooster processor Tyson Meals Inc (TSN.N) was ordered in 2001 to finish its $3.2 billion deal for meatpacker IBP Inc. Final yr the court docket ordered non-public fairness agency Kohlberg & Co LLC to shut its $550 million buy of DecoPac Holding Inc, which makes cake adorning merchandise.
However the patrons in these cases have been firms fairly than a person. By no means has such particular efficiency been granted on a deal of this scale.
WHAT IF MUSK RESISTS?
The authorized battle between Musk and Twitter will play out in Delaware’s Court docket of Chancery, which is specified within the merger settlement for disputes. learn extra
Delaware can also be a well-liked incorporation vacation spot for many U.S. public firms, together with Tesla Inc and different Musk firms corresponding to tunneling enterprise the Boring Co and Area Exploration Applied sciences Corp, referred to as SpaceX.
That provides the court docket jurisdiction over an unlimited quantity of Musk belongings to coerce compliance if wanted. Attorneys stated the court docket would start by holding Musk in contempt and issuing fines till he did as ordered.
“The court docket has capacious powers to implement its orders,” stated Francis Pileggi, an lawyer with Lewis Brisbois in Wilmington, Delaware.
If Musk continued to disregard a judgment, the court docket might order Tesla and different Delaware-incorporated firms through which Musk owns a stake to freeze his belongings or flip over shares.
“He’d be handled like a deadbeat dad not paying baby help,” stated Minor Myers, a professor of UConn College of Regulation. “It will not be that tough.”
WHAT HAS THE COURT DONE IN THE PAST?
When Delaware-incorporated ZST Digital Networks Inc (ZSTN.PK) was sued in Delaware in 2012 by one among its largest outdoors shareholders for entry to its books amid accounting irregularities, the Chinese language firm refused to conform. Travis Laster, a vice chancellor or decide on the Court docket of Chancery, appointed a receiver of the corporate to pressure it to show over the information. He additionally allowed the receiver to hunt to arrest executives in the event that they visited the USA.
The court docket has additionally compelled firms to adjust to orders by warning administrators they are going to be held personally accountable for accumulating fines.
Ann Lipton, a professor at Tulane College Regulation College, stated there are many examples of people against the court docket’s rulings who use appeals to tug out complying. However they finally obey court docket orders and she or he expects Musk will as effectively.
“He is not really insane,” she stated.
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Reporting by Tom Hals in Wilmington, Del.
Enhancing by Matthew Lewis
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