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Elon Musk’s countersuit against Twitter: All you need to know

Twitter's lawsuit to force Elon Musk to complete his $44 billion buyout bid is set to go to trial on October 17, a US judge has ordered, in a case with major stakes for both sides. (Photo by SUZANNE CORDEIRO / AFP) (AFP)Premium
Twitter's lawsuit to force Elon Musk to complete his $44 billion buyout bid is set to go to trial on October 17, a US judge has ordered, in a case with major stakes for both sides. (Photo by SUZANNE CORDEIRO / AFP) (AFP)

The lawsuit was submitted hours after Delaware Court of Chancery Chancellor Kathaleen McCormick scheduled a five-day trial commencing on October 17 to decide whether Elon Musk can back out of the Twitter agreement.

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Although the case was filed under seal, Elon Musk countersued Twitter Inc. on July 29, intensifying his legal battle with the social media firm over his attempt to back out of the $44-billion acquisition. Although the 164-page document was not accessible to the public, a redacted version might soon be made available in accordance with court procedures.

Musk's lawsuit was submitted hours after Delaware Court of Chancery Chancellor Kathaleen McCormick scheduled a five-day trial commencing on October 17 to decide whether Musk can back out of the agreement. A request for comment from Twitter did not immediately receive a response.

Also Read: Will try to keep heads down, says Elon Musk

The same day, a Twitter shareholder filed a lawsuit against Musk, requesting that the court order the billionaire to complete the transaction, declare that he violated his fiduciary obligation to Twitter shareholders, and grant damages for the losses he caused.

According to the lawsuit, which requests class-action status, Musk owes a fiduciary duty to Twitter's shareholders because of his 9.6 percent ownership position in the business and the takeover agreement, which gives him the power to veto many corporate decisions. Luigi Crispo, who owns 5,500 shares of Twitter, filed the complaint in the Court of Chancery.

Also Read: If only Elon Musk snapped instead of tweeted

The world’s richest man announced his decision to end the acquisition on July 8 and accused Twitter Inc. of breaching the agreement by exaggerating the number of false accounts on its platform.

Days later, Twitter filed a lawsuit, claiming that Musk was required by the merger agreement to close the deal at $54.20 per share and that the false account claims were a diversion. The company's shares closed at $41.61 on Friday, the highest close since Musk backed out of the agreement.

Also Read: Who is Nicole Shanahan? Here's how she features in rift between Musk, Brin

In order to lessen the possible harm to Twitter that the deal's uncertainty could bring, McCormick accelerated the matter to trial last week. Twitter has attributed Twitter's declining revenue and internal commotion to the legal battle.

The trial was set for October 17, but the two parties couldn't agree on how much access to internal documents and other evidence should be allowed during discovery. This week, Musk accused Twitter of being slow to respond to his discovery requests, and Twitter countered that he was requesting a tonne of information that was unrelated to the case's central question of whether Musk had broken the terms of the pact.

Also Read: Elon Musk's old video claiming 'money doesn't have power..' goes viral

The chief judge in her order on Friday appeared to anticipate discovery disputes to come.

"This order does not resolve any specific discovery disputes, including the propriety of any requests for large data sets," said McCormick.

Additionally, Musk will stand trial for one week starting on October 24 in Wilmington, Delaware. A Tesla shareholder is attempting to have the electric vehicle manufacturer's record-breaking $56 billion pay package for the CEO voided as corporate waste and unjust enrichment.

(With Reuters inputs)

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