Explainer: Can Elon Musk defy a court if commanded to buy Twitter?
If Elon Musk continued to avoid a judgment, the court could order Tesla and other Delaware-incorporated companies in which Musk owns a stake to freeze his assets or turn over shares
CAN A COURT ORDER MUSK TO BUY TWITTER?
Twitter is asking a Delaware court to grant “specific performance" under the terms of its contract with Musk - in other words, force him to finish the acquisition at the agreed price of $54.20 a share.
The court has launched such orders before. Chicken processor Tyson Foods Inc was commanded in 2001 to finish its $3.2 billion deal for meatpacker IBP Inc. Last year the court ordered individual equity firm Kohlberg & Co LLC to close its $550 million buy of DecoPac Holding Inc, which makes cake decorating products.
But the purchasers in these instances were companies rather than an individual. Never has such particular performance been granted on a deal of this scale.
WHAT IF MUSK RESISTS?
The legal battle between Musk and Twitter will consume in Delaware’s Court of Chancery, which is stated in the merger agreement for disputes.
Delaware is even a famous incorporation destination for most U.S. public companies, containing Tesla Inc and other Musk companies like tunneling venture the Boring Co and Space Exploration Technologies Corp, known as SpaceX.
That provides the court jurisdiction over a vast amount of Musk assets to coerce compliance if required . Lawyers told the court would begin by holding Musk in contempt and launching fines until he did as ordered.
“The court has capacious powers to enforce its commands ," said Francis Pileggi, lawyer with Lewis Brisbois in Wilmington, Delaware.
If Musk continued to avoid a judgment, the court could order Tesla and other Delaware-incorporated companies in which Musk owns a stake to hold his assets or turn over shares.
“He’d be treated such as a deadbeat dad not paying kid help ," told Minor Myers, a professor of U Conn School of Law. “It would not be that hard."
WHAT HAS THE COURT DONE IN THE PAST?
The court has even forced companies to comply with orders by warning directors they will be held individually liable for accumulating fines.
Ann Lipton, a professor at Tulane University Law School, told there are plenty of examples of personals opposed to the court’s rulings who utilize appeals to drag out complying. But they after all obey court orders and she expects Musk will as well.
“He’s not actually crazy ," she said.
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