The judge overseeing the takeover dispute between Elon Musk and Twitter decided on Thursday to adjourn the trial until October 28 at the request of the Tesla boss, meaning that the trial that was due to begin on October 1[ads1]7 will not continue as planned.
Twitter had resisted Musk’s proposal to delay the proceedings, raising concerns that he might not follow through on his word to close the deal quickly.
“If the transaction is not closed by 5:00 p.m. on October 28, 2022, the parties are requested to contact me by email that evening for the November 2022 court hearings,” said Delaware Chancery Court Chancellor Kathaleen St. Judge McCormick. the order.
Lawyers for Elon Musk filed a motion Thursday to delay the trial in the dispute with Twitter and to remove the trial set to begin Oct. 17 from the court’s calendar, noting “changed circumstances that have effectively advanced this action,” according to a trial Thursday.
The filing – which says the stay is “pending the completion of the transaction” – comes after Musk earlier this week proposed to proceed with the $44 billion acquisition of Twitter on the originally agreed terms after spending months trying to recover out of the agreement.
The filing states that Musk is “willing to close the transaction at $54.20, the debt financing parties are cooperating to finance the closing, and closing is expected around October 28.”
But the filing also suggests resistance from Twitter to halt the lawsuit. “Twitter won’t take yes for an answer. Amazingly, they have insisted on continuing with this lawsuit,” the letter says.
Lawyers for Twitter issued a sharp response to Musk’s filing. “The obstacle to ending this lawsuit is not, as the defendant says, Twitter’s unwillingness to take yes for an answer,” the letter says. “The obstacle is that the defendant still refuses to accept its contractual obligations.”
It notes that Musk has been trying for months to get out of the deal, and “now, on the eve of trial, the defendants declare that they intend to exit after all. “Trust us,” they say, “we mean it this time.”
“Until the defendant commits to shutting down as needed, Twitter is entitled to its day in court,” says Twitter’s letter. “The defendant can and should close next week. Until they do, this act is not litigated and should be brought to justice.”
The back-and-forth provides the clearest indication yet that Musk’s financing may now be the central issue in the dispute between the Tesla chief and Twitter to stop the lawsuit and complete the deal. Musk has previously said he would pay for the acquisition through a mix of debt obligations from financial institutions, equity financing from investors and his own assets.
But legal experts have raised concerns that debt financiers may now want to back out of the deal in light of recent changes in the debt market and declines in the value of social media companies. Twitter, according to experts, is likely to want to maintain the lawsuit as pressure on Musk unless he agrees to close the deal with or without debt financing.
In Thursday’s filing, Musk’s legal team said Twitter has opposed a stay based on concerns that Musk has made his offer to close the deal contingent on receiving debt financing and that the payment could fall through. “Counsel for the debt financing parties has advised that each of their clients is willing to meet their obligations,” Musk’s filing said.
The filing asks the court to stay the proceedings and order Twitter to complete the agreement.
“Proceeding toward litigation is not only a colossal waste of party and court resources, it will undermine the parties’ ability to close the transaction,” the filing states. “Instead of allowing the parties to turn their focus to securing the debt financing necessary to complete the transaction and prepare for a transition of the business, the parties will instead remain distracted by completing discovery and an unnecessary trial.”
In their response letter, Twitter’s lawyers state that Musk’s team has refused “to commit to any end date”. It added that a representative of one of the banks that would lend to Musk testified Thursday morning that “Mr. Musk has yet to send them a loan notice and has not otherwise communicated to them that he intends to close the transaction, let alone on a specific timeline.”
Twitter’s lawyers added: “Defendants should agree to close on Monday, October 10.”
Earlier Thursday, lawyers for Musk and Twitter agreed to delay the Tesla chief’s recusal in the legal battle, a source familiar with the negotiations told CNN. Musk’s deposition was set to begin Thursday, according to a notice filed earlier this week. It’s not clear if a new date has been set for Musk’s deposition, but Twitter could end up pushing to complete it early next week if a deal isn’t reached.
As of Wednesday, the two sides had not yet reached an agreement to close the acquisition, a separate source told CNN. Delaware Chancery Court Chancellor Kathaleen St. Jude McCormick, the judge overseeing the trial, said in a proceeding Wednesday that neither side had requested a stay, and she continued to prepare for the trial, which was set to begin Oct. 17.
On Thursday, McCormick sent a letter to both sides setting deadlines for responding to discovery motions, noting that “trial is fast approaching.”