Judge on Twitter v. Musk made a rare decision: ordering a deal to close

July 15 (Reuters) – The judge who oversees the $ 44 billion lawsuit filed by Twitter Inc’s (TWTR.N) against Elon Musk has a good reputation and is one of the few lawyers to ever order a reluctant buyer. to close a U.S. corporate merger.

Kathaleen McCormick took over the role of chancellor or chief judge at the Court of Chancery last year, the first woman in that role. On Wednesday, she was awarded the Twitter lawsuit, which seeks to force Musk to complete her deal for the social media platform, which looks set to become one of the biggest legal showdowns in years.

“She already has a track record of not tolerating any of the worst behaviors we see in these areas when people want to get out of agreements,” said Adam Badawi, a law professor specializing in corporate governance at the University of California. Berkeley. “She’s a serious, no-nonsense judge.”

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In contrast to Musk’s cheerful and fleeting behavior, she is known as soft-spoken, accommodating and gracious – but a person who also stands firm. She advocates for respect among litigants and integrity at legal conferences.

“We’ve always had each other’s backs, we’ve always been out drinking after quarrels and maintained that level of courtesy,” she told a rally at the University of Delaware this year.

After weeks of confrontational tweets suggesting Twitter was hiding the true number of fake accounts, Musk said on July 8 that he stopped buying $ 54.20-per-Twitter stock worth $ 44 billion. On Tuesday, the social media platform sued. Read more

McCormick scheduled for Friday the first hearing for July 19 in Wilmington, where she will consider Twitter’s request to expedite the case and conduct a four-day trial in September.

Judges have only ordered reluctant buyers to close company acquisitions only a handful of times, according to legal experts and court records. One of them was McCormick.

Last year, McCormick caught the attention of Wall Street dealers by ordering a subsidiary of private equity firm Kohlberg & Co LLC to close its $ 550 million acquisition of DecoPac Holding Inc, which makes cake decorating products.

She described her verdict as “calculating a victory for contract security” and rejected Kohlberg’s arguments that it could go away due to lack of funding.

The case has many parallels to the Twitter agreement. Like Musk, Kohlberg said it went away because DecoPac violated the merger agreement. Like Musk, Kohlberg argued in part that DecoPac failed to maintain normal operations.

There are also differences. Musk’s deal is bigger, involves a listed target company on Twitter and could have consequences for Tesla Inc, the electric car maker that is the source of much of Musk’s fortune.

In other cases, she has come down on the side of shareholders when they clashed with management.

Last year, she prevented energy company The Williams Cos Inc from adopting a so-called poison pill anti-takeover measure, saying it violated their trust in shareholders.

Last month, she said shareholders in Carvana Co (CVNA.N) could sue the board of directors for a direct offering of shares to select investors as the share price was under pressure during the early pandemic.

Graduated from Notre Dame Law School, McCormick began his career with the Delaware branch of the Legal Aid Society, which helps low-income people navigate the justice system.

She went into private practice “mainly for financial reasons,” she told the Delaware Senate during her confirmation hearing, joining Young Conaway Stargatt & Taylor, one of the state’s most important business firms.

She joined the Chancellery in 2018 as Vice-Chancellor and became the first woman to lead the Chancellery last year.

Despite his gentle manner, Eric Talley, who specializes in company law at Columbia Law School, said he doubts McCormick would be cowed by Musk.

“I would not place my bets on Chancellor McCormick suddenly getting weak in the knee,” he said.

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Reporting by Tom Hals in Wilmington, Delaware and Hyun Joo Jin in San Francisco; editing by Noeleen Walder and Jonathan Oatis

Our standards: Thomson Reuters Trust Principles.

Tom Hals

Thomson Reuters

Award-winning reporter covering US courts and law from the COVID-19 pandemic to high-profile criminal cases and Wall Street’s biggest failures with more than two decades of experience in international financial news in Asia and Europe.

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