What if Musk loses the Twitter case but defies the court?

Twitter needs a Delaware court to order Elon Musk to buy the social media carrier for $44 billion, as he promised again in April. But what if a judge makes that ruling and Musk balks?

The Tesla billionaire’s reputation for disregarding authorities pronouncements has a few concerned that he might flout an destructive ruling of the Delaware Court of Chancery, acknowledged for its coping with of high-profile enterprise disputes.

Musk hopes to win the case that’s headed for an October trial. He’s scheduled to be deposed through Twitter legal professionals beginning Thursday.

But the consequences of him dropping badly — both via an order of “precise performance” that forces him to finish the deal, or by walking faraway from Twitter however nonetheless coughing up 1000000000 greenbacks or extra for breach of settlement — has raised issues about how the Delaware court could put in force its final ruling.

“The hassle with particular performance, specially with Elon Musk, is that it’s doubtful whether the order of the court might be obeyed,” retired Delaware Supreme Court Justice Carolyn Berger instructed CNBC in July. “And the courts in Delaware — courts throughout — are very involved about issuing a choice or issuing an order that then is ignored, flouted.”Berger, who was additionally a vice chancellor of the Chancery Court inside the Eighties and 1990s, stood by way of those concerns in an interview with The Associated Press but stated she doubted the Delaware institution might move so far as to make him entire the deal.

“The courtroom can impose sanctions and the courtroom can kind of coerce Musk into taking up the company,” she said. “But why might the court docket try this while what virtually is at stake is cash?”

Berger said she expects San Francisco-based Twitter to be successful, however said a less tumultuous remedy for the organisation and its shareholders might make Musk pay financial damages. “The courtroom doesn’t want to be in a function to step in and basically run this organisation,” she said.

Musk and his legal professionals didn’t respond to requests for remark.

Other criminal observers say such defiance is almost impossible to imagine, even from a famously combative personality which include Musk. He recounted he might lose in August in explaining why he all at once offered nearly $7 billion really worth of Tesla stocks.“I take him at his phrase,” said Ann Lipton, an accomplice regulation professor at Tulane University. “He desires to win. Maybe he’s got his very own judgment as to what the percentages are. But he’s additionally being form of sensible about this. He’s getting a few coins ready so he doesn’t must sell off his Tesla shares if it seems he is ordered to buy the agency.”

A ruling of precise performance could pressure Musk to pay up his $33.Five billion non-public stake inside the deal; the fee will increase to $44 billion with promised financing from backers along with Morgan Stanley.

The Delaware court has powers to put into effect its orders, and could employ a receivership to capture some of Musk’s property, specifically Tesla stock, if he doesn’t comply, in keeping with Tom Lin, a law professor at Temple University.

In a precedent set just this week related to contempt for noncompliance with a court order, a choose affirmed that stocks of a employer integrated in Delaware are personal assets problem to the Court of Chancery’s jurisdiction. The judge referred to in his Monday ruling that it is probably the primary time the courtroom has invoked its authority to address possession of stocks in a contempt proceeding, as he divested an entity of its stocks and transferred identify to some other party within the lawsuit.Speculation that Musk may be threatened with prison time for failing to conform with a ruling is unrealistic, said Berger. “At least, now not for the Court of Chancery,” stated the previous choose. “That’s now not the way the courtroom operates.”

But extra critical, Lin stated Musk’s criminal advisers will strongly urge him to comply with the rulings of a court docket that robotically takes cases concerning Tesla and different corporations included within the nation of Delaware.

“If you are an govt at a primary American organisation included in Delaware, it’s very hard for you to do commercial enterprise and defy the chancery court docket’s orders,” Lin stated.Concerns approximately Musk’s compliance derive from his beyond behavior coping with various palms of the authorities. In an extended-running dispute with the U.S. Securities and Exchange Commission, he was accused of defying a securities fraud agreement that required that his tweets be approved by means of a Tesla attorney earlier than being posted. He publicly feuded with California officers over whether Tesla’s electric vehicle manufacturing unit need to continue to be close down at some stage in the early stages of the COVID-19 pandemic.

He’s additionally taken a combative approach in Delaware Chancery Court, calling an opposing legal professional a “awful human being” whilst defending Tesla’s 2016 acquisition of SolarCity against a lawsuit that blamed Musk for a deal rife with conflicts of interest and broken promises. He and his lawyers produce other Delaware instances nonetheless pending, inclusive of one concerning his compensation package deal at Tesla.

“I think we’ve got a whole lot of gamers who, as loose a cannon as Elon Musk is, rely on the goodwill of the Delaware courts on an ongoing foundation for their companies,” Lipton said.

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