Delaware Court Sets Date For Twitter v. Elon Musk Trial

Billionaire Elon Musk may have been getting some sun in Greece this weekend, but it seems his vacation isn't going to last for long.

On Tuesday, the Delaware Court of Chancery, which has a reputation for resolving business deals quickly and without juries, determined a trial date for Twitter's lawsuit.

On Tuesday afternoon, Deadline announced that Chief Judge Kathaleen McCormick had decided to set a five-day trial in October to hear why Elon Musk should follow through with his $44 billion dollar deal to take over the social media company, even though he previously indicated that he wished to "terminate" the deal.

Twitter had been asking for a four-day trial in September. Lawyers for the Tesla CEO wanted a court date scheduled for February 2023. In the interest of shareholders, it seemed prudent to hold the trial sooner rather than later.

Judge McCormick agreed with Twitter's argument that a delay in the trial might cause the business irreparable harm. Although Musk's attorneys had argued that a fall trial was an "infeasible" time frame for both parties, the judge disagreed.

Judge McCormick stated, "In my view, the defendants underestimate the ability of the court."

Back in January, Elon Musk started quietly buying up shares of Twitter. However, this went largely unnoticed until the beginning of April, when the SpaceX founder became the then-largest shareholder of the company.

Twitter attempted to make a deal, requesting that he not buy up any more shares in the company in exchange for a seat on Twitter's board of directors. Musk refused. Instead, according to an SEC filing, Musk texted Twitter board chair Bret Taylor, offering to buy the company for $54.20 a share.

At first, Twitter attempted to adopt a "poison pill" defense to prevent Musk from taking over the platform. However, by the end of April, they had reached an agreement and Musk signed a contract to go through with the $44 billion dollar deal.

Over the past few months, users may remember seeing Musk's tweets claiming that the Twitter deal was "on hold" pending a more thorough review of the number of bot and spam accounts on the platform. That is one of the reasons why Musk decided to back out of the agreement earlier this month.

Elon Musk claims that Twitter is in "breach" of the merger agreement because he claims that they have not provided him with the information he's requesting about the number of true accounts on the platform. He is also accusing Twitter of misrepresenting the real number of bot and spam accounts on the platform to officials.

If that weren't enough, he also claims that, as part of the merger agreement, Twitter was supposed to consult him before laying off high-ranking employees. Musk alleges that they did not do so when they fired a number of key executives last month.

The day that Musk announced in an SEC filing that he wanted to "terminate" the deal, chairman Bret Taylor took to Twitter to announce that the company planned on taking legal action to force him to go through with the deal. On July 12, they made good on their word and filed a lawsuit.

The lawsuit claims that Elon Musk “refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests … Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”

In the original contract in April, the two sides did add a billion dollar "break-up fee" into their contract; however, Twitter says that fee is only for good cause and they are looking for Judge McCormick to find that Elon Musk must go through with the deal.

Some financial analysts have speculated that Musk is only going to court to try to get the price of the company lowered. On July 11, a day before the lawsuit was filed, Twitter shares were trading for around $36.50, far below the $54.20 Musk had originally agreed to pay back in April. Other analysts expect that Elon Musk and Twitter will reach a settlement out of court long before October rolls around.