Explainer- Can Elon Musk defy a court docket if ordered to purchase Twitter?

Twitter Inc has sued Elon Musk to pressure him to undergo with the $44 billion acquisition of the social media firm.

Twitter Inc has sued Elon Musk to pressure him to undergo with the $44 billion acquisition of the social media firm. What occurs if Twitter succeeds and the world’s richest man, who repeatedly taunts securities regulators, refuses to adjust to the court docket order?


Twitter is asking a Delaware court docket to grant “specific performance” 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.

The court docket has issued such orders earlier than. Chicken processor Tyson Foods Inc was ordered in 2001 to finish its $3.2 billion deal for meatpacker IBP Inc. Last 12 months the court docket ordered personal fairness agency Kohlberg & Co LLC to shut its $550 million buy of DecoPac Holding Inc, which makes cake adorning merchandise.

But the patrons in these cases have been corporations relatively than a person. Never has such particular efficiency been granted on a deal of this scale.


The authorized battle between Musk and Twitter will play out in Delaware’s Court of Chancery, which is specified within the merger settlement for disputes.

Delaware can also be a preferred incorporation vacation spot for many US public corporations, together with Tesla Inc and different Musk corporations similar to tunneling enterprise the Boring Co and Space Exploration Technologies Corp, often known as SpaceX.

That provides the court docket jurisdiction over an enormous quantity of Musk property to coerce compliance if wanted. Lawyers mentioned the court docket would start by holding Musk in contempt and issuing fines till he did as ordered.

“The court has capacious powers to enforce its orders,” mentioned Francis Pileggi, an legal professional with Lewis Brisbois in Wilmington, Delaware.

If Musk continued to disregard a judgment, the court docket may order Tesla and different Delaware-incorporated corporations by which Musk owns a stake to freeze his property or flip over shares.

“He’d be treated like a deadbeat dad not paying child support,” mentioned Minor Myers, a professor of UConn School of Law. “It would not be that hard.”


When Delaware-incorporated ZST Digital Networks Inc was sued in Delaware in 2012 by certainly one of its largest exterior shareholders for entry to its books amid accounting irregularities, the Chinese firm refused to conform. Travis Laster, a vice chancellor or choose on the Court 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 United States.

The court docket has additionally pressured corporations to adjust to orders by warning administrators they are going to be held personally chargeable for accumulating fines.

Ann Lipton, a professor at Tulane University Law School, mentioned there are many examples of people against the court docket’s rulings who use appeals to tug out complying. But they ultimately obey court docket orders and he or she expects Musk will as effectively.

“He’s not actually insane,” she mentioned.

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