New York CNN Business —
The judge who oversaw the takeover dispute between Elon Musk and Twitter ruled on Thursday to adjourn the legal proceedings until October 28 at the request of Tesla’s CEO, meaning the trial, which was set to begin on October 17, will not continue as it would. planned.
Twitter had opposed Musk’s motion to stay the proceedings, expressing concern that he would not keep his word to close the deal quickly.
“If the transaction is not finalized by 5:00 p.m. on Oct. 28, 2022, the parties are instructed to contact me by email that evening to obtain the November 2022 trial dates,” the Chancellor of the Delaware Chancery said. Court, Kathaleen St. Judge McCormick, in a statement. the order.
Attorneys for Elon Musk filed a motion Thursday to suspend legal proceedings in the dispute with Twitter and to remove the trial, which was set to begin on October 17, from the court’s agenda, citing “altered circumstances that could affect this action.” effectively argued”. according to a court ruling on Thursday.
The filing — stating the stay is “pending deal closing” — comes after Musk earlier this week proposed to go ahead with the $44 billion acquisition of Twitter on the terms originally agreed upon, after months of trying. to get out of the deal.
The filing states that Musk “is willing to close the transaction for $54.20, the debt financing parties are working together to fund the closing, and closing is expected on or about October 28.”
But the filing also hints at Twitter’s opposition to halting the legal process. “Twitter won’t accept yes for an answer. Amazingly, they have insisted on going forward with this lawsuit,” the letter said.
Twitter lawyers reacted sharply to Musk’s request. “The obstacle to ending this lawsuit is not, as defendants say, Twitter’s unwillingness to consider yes as an answer,” the letter said. “The obstacle is that defendants still refuse to accept their contractual obligations.”
It notes that Musk has been trying to end the deal for months and “now, on the eve of the trial, defendants declare they intend to close anyway. ‘Trust us,’ they say, ‘we’re serious this time.’ ”
“Until the defendants commit to shutting down as required, Twitter is entitled to its day in court,” Twitter’s letter reads. “Defendants can and should close next week. As long as they don’t, this action is unquestionable and should be brought to justice.”
The back-and-forth offers the clearest indication yet that Musk’s funding may now be the central issue in the dispute between the Tesla CEO and Twitter over the halting of the legal process and the completion of the deal. Musk has previously said he would pay for the acquisition through a mix of debt obligations from financial institutions, equity financing from investors and his own assets.
But legal experts have expressed concern that debt lenders are now looking to pull out of the deal in the face of recent changes in the debt market and declines in social media company values. Twitter would likely want to continue the process as pressure on Musk, experts say, unless he agrees to close the deal with or without debt financing.
In Thursday’s filing, Musk’s legal team said Twitter is opposing a postponement over concerns that Musk has made his offer to close the deal pending receipt of the debt financing, and that the payment could fail. “The counsel to the debt financing parties has advised that each of their clients is willing to meet their obligations,” Musk’s filing reads.
The filing asks the court to suspend proceedings and order Twitter to complete the deal.
“Continuing a lawsuit is not only a huge waste of party and judicial resources, it will undermine the parties’ ability to close the transaction,” the filing said. Instead of allowing the parties to focus their attention on securing the debt financing needed to complete the transaction and preparing for a transfer of the business, the parties will instead remain distracted by discovery and an unnecessary trial.”
In their reply letter, Twitter’s lawyers state that Musk’s team has refused to “commit to a closing date”. It added that a representative of one of the banks that Musk wanted to lend testified Thursday morning that “Mr. Musk has yet to send them a loan notice and has not otherwise informed them that he intends to close the transaction, let are on a certain timeline.”
Twitter’s lawyers added: “Defendants should arrange to close on Monday, October 10.”
Earlier Thursday, Musk and Twitter attorneys agreed to delay Tesla’s CEO statement in the lawsuit, a source familiar with the negotiations told CNN. Musk’s statement was set to begin Thursday, according to a report filed earlier this week. It’s not clear if a new date has been set for Musk’s impeachment, but Twitter could push to finalize it early next week if no deal is reached.
On Wednesday, the two sides had yet to strike a deal to complete the acquisition, a separate source told CNN. Delaware Chancery Court Chancellor Kathaleen St. Jude McCormick, the judge overseeing the trial, said in a lawsuit Wednesday that neither side had filed to stay the proceedings and that she continued to prepare for the trial, which was scheduled to take place on Oct. 17. to start.
On Thursday, McCormick submitted a letter to both sides setting deadlines for responding to discovery motions, noting that the “trial is rapidly approaching.”