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The judge overseeing the takeover dispute between Elon Musk and Twitter ruled on Thursday to halt court proceedings until Oct. 28 following a request from Tesla’s CEO, meaning the trial that was scheduled to begin on Oct. 17 October will not go ahead as planned.
Twitter had opposed Musk’s motion to stay the proceedings and raised concerns that it would not keep its word to quickly close the deal.
“If the transaction does not close by 5 p.m. on October 28, 2022, the parties are instructed to contact me by email that evening to obtain trial dates for November 2022,” he said. said the judge, Delaware Cancellation Court Chancellor Kathaleen St. Judge McCormick. the order
Elon Musk’s lawyers filed a motion Thursday to stay court proceedings in his dispute with Twitter and to remove the trial that had been scheduled to begin Oct. 17 from the court’s calendar, citing “changed circumstances that have effectively raised this action”. according to a Thursday court document.
The filing, which says the stay is “pending the closing of the transaction,” comes after Musk earlier this week proposed to proceed with the acquisition of Twitter for $44 billion on the terms initially agreed after spending months trying to get out of the deal.
The filing states that Musk is “willing to close the transaction at $54.20, the debt financing parties are working cooperatively to finance the closing and it is expected to close on or around October 28.”
But the filing also alludes to Twitter’s resistance to stopping legal proceedings. “Twitter will not take yes for an answer. Surprisingly, they have insisted on continuing this litigation,” according to the letter.
Twitter lawyers issued a strong response to Musk’s filing. “The obstacle to ending this litigation is not, as the defendants claim, that Twitter is unwilling to take yes for an answer,” the letter states. “The obstacle is that the defendants still refuse to accept their contractual obligations.”
He notes that for months, Musk has been trying to get out of the deal and “now, on the eve of trial, the defendants say they intend to close after all. ‘Trust us,’ they say, ‘this time we mean it. ‘”.
“Until the defendants agree to shut down as necessary, Twitter is entitled to its day in court,” Twitter’s letter states. “The defendants can and should close next week. Until they do, this action is not moot and should go to trial.”
The back-and-forth offers the clearest indication yet that Musk’s funding may now be at the heart of the dispute between the Tesla CEO and Twitter to halt legal proceedings and complete the deal. Musk has previously said he would pay for the acquisition through a combination of debt commitments 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 the declining value of social media companies. Twitter, experts say, would likely want to keep the litigation 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 resisted a stay based on concerns that Musk had made his offer to close the deal conditional on receiving debt financing and that the payment could fail. “Counsel for the debt financing parties has advised that each of their clients is prepared to meet their obligations,” Musk says.
The filing asks the court to stay the proceedings and order Twitter to end the settlement.
“Proceeding to trial is not only an enormous waste of party and court resources, but will undermine the parties’ ability to close the transaction,” the filing states. “Instead of allowing the parties to focus on securing the debt financing necessary to consummate the transaction and prepare for a business transition, the parties will be distracted by completing discovery and an unnecessary trial.”
In their response letter, Twitter’s lawyers claim that Musk’s team has refused to “commit to any closing date”. It added that a representative of one of the banks that will lend to Musk said Thursday morning that “Mr. Musk has not yet sent them a loan notice and has not otherwise notified them that he intends to close the transaction, let alone any particular deadline.
Attorneys for Twitter added: “Defendants should arrange for closure on Monday, October 10.”
Earlier Thursday, lawyers for Musk and Twitter agreed to postpone the Tesla CEO’s deposition in the legal battle, a source familiar with the negotiations told CNN. Musk’s statement was scheduled to begin Thursday, according to a notice filed earlier this week. It’s unclear if a new date has been set for Musk’s deposition, but Twitter could end up pushing for completion as early as next week if no deal is reached.
As of Wednesday, the two sides had not yet reached an agreement to close the acquisition, an independent source told CNN. Delaware Court of Chancery Chancellor Kathaleen St. Jude McCormick, the judge overseeing the litigation, said in a court filing Wednesday that neither side had requested a stay of proceedings and that she was continuing to prepare for the trial, which is set to begin on Oct. 17.
On Thursday, McCormick submitted a letter to both sides setting out deadlines for responding to discovery motions, noting that “trial is fast approaching.”