The judge overseeing the acquisition dispute between Elon Musk and Twitter decided on Thursday to stay the legal proceedings until October 28 following a request from the CEO of Tesla, which means that the trial which was to begin on October 17 will not go as planned.
Twitter had opposed Musk’s motion to halt proceedings and raised concerns that he would not follow through on his word to close the deal quickly.
“If the transaction does not close by 5 p.m. on October 28, 2022, the parties are requested to contact me by email that evening to obtain the November 2022 trial dates,” said the judge, the Chancellor of the Delaware Chancery Court, Kathaleen St. Judge McCormick, in order.
Lawyers for Elon Musk on Thursday filed a motion to stay legal proceedings in his dispute with Twitter and to remove from the court schedule the trial that was scheduled to begin on October 17, noting “altered circumstances that effectively prompted this action “. according to a court filing Thursday.
The filing – which says the suspension is “pending closing of the transaction” – comes after Musk earlier this week proposed procedure with the acquisition of Twitter for 44 billion dollars on the conditions initially agreed after spending months trying to get out of the case.
The filing says Musk is “willing to close the transaction at $54.20, the debt financing parties are working cooperatively to fund the closing, and closing is expected on or about October 28.”
But the filing also hints at Twitter’s resistance to ending the lawsuits. “Twitter won’t take a yes for an answer. Surprisingly, they insisted on pursuing this litigation,” according to the letter.
Twitter attorneys have issued a specific response to Musk’s filing. “The obstacle to ending this litigation is not, as the defendants say, that Twitter is unwilling to accept a yes for an answer,” the letter reads. “The hurdle is that the defendants are still refusing to accept their contractual obligations.”
He notes that for months Musk tried to get out of the deal and “now, on the eve of trial, defendants say they intend to close after all. ‘Trust us,’ say- them, “we really mean it this time.”
“Until the defendants agree to shut down as required, Twitter is entitled to its day in court,” Twitter’s letter reads. “Defendants can and should close next week. Until they do, this action is not moot and should be taken to court.
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 legal proceedings and the conclusion of the deal. Musk has previously said he will pay for the acquisition through a combination of debt commitments from financial institutions, equity financing from investors and his own assets.
But legal experts have raised concerns that the debt financiers may now want to pull out of the deal in light of recent changes in the debt market and the falling value of media companies social. Twitter, experts say, would likely want to keep the litigation going as pressure on Musk unless he agrees to complete the deal with or without the debt financing.
In Thursday’s filing, Musk’s legal team said Twitter resisted a stay due to concerns that Musk made his offer to complete the deal contingent on receiving debt funding, and that payment could fail. “Attorneys for the parties to the debt financing have indicated that each of their clients is prepared to honor their obligations,” Musk’s filing said.
The filing asks the court to stay the proceedings and order Twitter to enter into the agreement.
“Pursuing a lawsuit is not only a huge waste of court and judicial resources, it will compromise the parties’ ability to complete the transaction,” the filing said. “Instead of allowing the parties to focus on securing the debt financing necessary to complete the transaction and prepare for a business transition, the parties will instead remain distracted by completing the discovery and an unnecessary lawsuit.”
In their response letter, Twitter’s attorneys say Musk’s team declined “to commit to a closing date.” He added that a representative from one of the banks willing to lend to Musk testified Thursday morning that “Mr. Musk has yet to send them a borrowing notice or otherwise communicate to them that he intends to complete the transaction, let alone within a particular time frame.
Twitter’s attorneys added, “Defendants should make arrangements to close on Monday, October 10.”
Earlier Thursday, attorneys for Musk and Twitter agreed to postpone the Tesla CEO’s deposition in the court battle, a source familiar with the negotiations told CNN. Musk’s deposition was scheduled to begin on Thursday, according to a notice filed earlier this week. It’s unclear if a new date has been set for Musk’s deposition, but Twitter could end up pushing to finish it off early next week if a deal isn’t reached.
As of Wednesday, the two parties had yet to reach an agreement to complete the acquisition, a separate source told CNN. Chancellor of the Delaware Court of Chancery Kathaleen St. Jude McCormick, the judge overseeing the litigation, said in a court filing Wednesday that neither party filed a motion to stay proceedings and that she continued to prepare for the start of the trial on October 17.
On Thursday, McCormick filed a letter to both parties outlining timelines for responding to discovery requests, noting that the “trial is fast approaching.”