Ordering to close a deal

Elon Musk cancels massive deal with Twitter

The judge overseeing Twitter Inc’s $44 billion lawsuit against Elon Musk has a no-nonsense reputation and the distinction of being one of the few judges to order a reluctant buyer to close a U.S. company merger.

Kathleen McCormick took over as chancellor, or chief justice, of the Court of Chancery last year, the first woman in that role. On Wednesday, he set aside a Twitter lawsuit seeking to force Musk to end a deal for the social media platform in what could be one of the biggest legal battles in years.

“She disapproves of some of the bad behavior in these areas where people want to get out of contracts,” 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 brash and boisterous demeanor, he is known to be soft-spoken, approachable and warm-hearted. He advocates respect among lawyers and fairness in legal conferences.

“We’ve always had each other’s backs, we’ve always gone out for drinks after arguments, maintaining this level of civility,” he told a gathering at the University of Delaware this year.

After weeks of conflicting tweets that Twitter was hiding the true number of fake accounts, Musk on Friday said he was closing in on a $54.20-for-$44 billion acquisition of Twitter stock. On Tuesday, the social media platform sued.

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

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Last year, McCormick drew attention from Wall Street contractors and ordered an affiliate of private equity firm Kohlberg & Co. LLC to close a $550 million purchase of Decoback Holding Inc.

He described his ruling as “striking a victory for the treaty’s commitment” and rejected Kohlberg’s arguments that it could be pulled away due to lack of funding.

The case has many parallels to the Twitter deal. Like Musk, Kohlberg said it was walking away because Decoback breached the merger agreement. Like Musk, Kohlberg argued that Decoback failed to maintain normal operations.

There are also differences. Musk’s deal is huge, involves the target company, which is publicly traded on Twitter, and could have implications for electric vehicle maker Tesla Inc., the source of much of Musk’s wealth.

On other occasions, she came down on the side of shareholders when clashing with management.

Last year, energy giant The Williams Cos Inc blocked a so-called anti-poison pill move, saying it breached its fiduciary duty to shareholders.

Last month, he said shareholders of Carvana Co. may sue the board for issuing shares directly to select investors when the stock price fell during the initial pandemic.

A graduate of Notre Dame Law School, McCormick began her career at the Delaware branch of the Legal Aid Society, which helps low-income people navigate the court system.

He went into private practice “primarily for financial reasons,” he told the Delaware Senate during his confirmation hearing, joining Young Conaway Starcott & Taylor, one of the state’s top firms for commercial litigation.

She joined the Court of Chancery as a vice chancellor in 2018 and became the first woman to preside over the court last year.

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Despite his soft-spoken demeanor, Eric Daly, who specializes in corporate law at Columbia Law School, suspects that McCormick would be intimidated by Musk.

“I’m not going to place my bets because President McCormick is suddenly weak,” he said.

(Other than the headline, this story was not edited by NDTV staff and was published from a syndicated feed.)

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