Delaware Court of Chancery Stays Trial in Twitter, Inc. v. Musk, Transaction Closes
By Francis G.X. Pileggi, Esquire
Every major news publication has reported over the last few months about the lawsuit involving Twitter, Inc. and Elon Musk, and the claims that each made against the other regarding the offer to purchase Twitter and the defenses previously presented to completing the transaction. At the beginning of October, Musk announced that he would close on the transaction to purchase Twitter at the original price. He then requested that the Court of Chancery stay the trial that was scheduled to begin on October 17, 2022. Twitter, Inc. opposed the motion to stay on the basis that there was no assurance that the transaction would close “fast enough.” The Court of Chancery rejected that opposition, and on October 6, 2022, in a letter decision, the court granted the motion to stay the litigation until 5:00 p.m. on October 28, 2022, “to permit the parties to close on the transaction.” However, the court cautioned that if the transaction did not close by 5:00 p.m. on October 28, 2022, “the parties are instructed to contact [Chancellor Kathaleen St. Jude McCormick] by email that evening to obtain November 2022 trial dates.”
Depending on when you are reading this short blurb about this matter, there are many permutations on what could happen if the transaction for Musk to purchase Twitter does not close by that deadline. Although many press reports suggest that the transaction will close by that deadline, if it is not closed until a few days after that deadline, as a practical matter, the trial will not begin before early November, so there might be a few days of flexibility. Nonetheless, the parties should expect that if it is not closed by the deadline, that the court will schedule a trial in November.
Based on public information, the court already has other trials scheduled in November, but the Court of Chancery is famous for finding time in its busy schedule to hold trials on an expedited basis even in major multi-billion dollar disputes such as this one.
Many pundits have predicted what the outcome of the trial would be if it took place, but most of those pundits do not have access to the evidence that has been exchanged in discovery, some of which is confidential and not disclosed to the public. My prediction is that the case will not be tried and that the transaction will close on or shortly after the deadline provided. Regardless, the procedural history of the expedited litigation, which was scheduled for trial only a few months after the complaint was filed in this multi-billion-dollar contract dispute, is an example of how common it is for highly of complex disputes to be given a prompt trial on the merits in the Delaware Court of Chancery.
Update: Following the submission of this month-in-brief, Twitter announced that Musk’s acquisition of the company closed on Thursday, October 27, 2022.
* Francis G.X. Pileggi, Esquire, is a managing partner of the Delaware office of Lewis Brisbois Bisgaard & Smith, LLP. His email address is [email protected]. He comments on key corporate and commercial decisions as well as legal ethics topics at www.DelawareLitigation.com.