The judge who oversees Twitter Inc.’s $ 44 billion lawsuit against Elon Musk has a silly reputation as well as being one of the few lawyers who has ever ordered a reluctant buyer to close a US 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 that seeks to force Musk to complete her deal for the social media platform, which promises to be one of the largest legal settlements in many years.
“She already has a track record of not tolerating any of the worst behavior we see in these areas when people want to get out of deals,”[ads1]; said Adam Badawi, a law professor specializing in corporate governance at the University of California Berkeley. “She’s a serious, no-nonsense judge.”
In contrast to Musk’s cheeky and fleeting demeanor, she is known as soft, welcoming and gracious – but a person who also stands her ground. She advocates for respect among plaintiffs and integrity at legal conferences.
“We have always had each other’s backs, we have always gone out to drink after quarrels and maintained this level of courtesy,” she told a gathering at the University of Delaware this year.
After several weeks of confrontational tweets suggesting that Twitter was hiding the true number of fake accounts, Musk said Friday that he was closing the $ 54.20 share purchase on Twitter, worth $ 44 billion. On Tuesday, the social media platform sued.
Judges have ordered reluctant buyers to close business 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 the $ 550 million acquisition of DecoPac Holding Inc, which makes cake decorating products.
She described her ruling as “calling for 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 passed away because DecoPac broke the merger agreement. Like Musk, Kohlberg claimed in part that DecoPac failed to maintain ordinary operations.
There are also differences. Musk’s deal is bigger, involves a listed target company on Twitter and could have implications 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 shareholder side when they collided with the management.
Last year, she prevented the energy company The Williams Cos Inc from adopting a so-called poison pill anti-takeover measure, and said that it violated their duty of trust towards the shareholders.
Last month, she said that the shareholders of Carvana Co could sue the board for a direct offer of shares to selected investors when the share price was depressed during the early pandemic.
McCormick, a graduate of Notre Dame Law School, 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 “primarily for financial reasons,” she told the Delaware Senate during her confirmation hearing, and joined Young Conaway Stargatt & Taylor, one of the state’s most important business litigation firms.
She joined the Chancellor’s Court in 2018 as Vice-Chancellor and became the first woman to lead the Chancellor’s Court last year.
Despite her gentle manner, Eric Talley, who specializes in company law at Columbia Law School, said he doubts McCormick would be cowed by Musk.
“I did not want Chancellor McCormick to suddenly get weak in the knee,” he said.
(Apart from the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)