Active Stocks
Sat Mar 02 2024 12:29:56
  1. Tata Steel share price
  2. 155.30 3.53%
  1. HDFC Bank share price
  2. 1,430.50 -0.05%
  1. State Bank Of India share price
  2. 773.40 0.53%
  1. ICICI Bank share price
  2. 1,084.60 -0.21%
  1. Axis Bank share price
  2. 1,095.00 -0.40%
Business News/ Technology / News/  Elon Musk's X Corp files lawsuit against Wachtell, Lipton and others. Here's why
BackBack

Elon Musk's X Corp files lawsuit against Wachtell, Lipton and others. Here's why

Elon Musk's X Corp is suing law firm Wachtell, Lipton, Rosen & Katz, seeking to recover a significant portion of the $90 million fee they received for preventing Musk from abandoning his $44 billion acquisition of Twitter.

For representation purposes (REUTERS)Premium
For representation purposes (REUTERS)

Elon Musk's X Corp, the entity that owns Twitter, has filed a lawsuit against the prestigious law firm Wachtell, Lipton, Rosen & Katz. The lawsuit aims to recover a significant portion of the $90 million fee that the law firm received for successfully preventing Musk from abandoning his $44 billion acquisition of Twitter. 

The complaint was lodged on Wednesday in the California Superior Court located in San Francisco.

Musk has accused Wachtell of taking advantage of the situation by accepting substantial "success" fees from departing Twitter executives, just days before the completion of the buyout on October 27, 2022. These executives were allegedly grateful that Musk would be compelled to proceed with the acquisition. 

Despite Wachtell billing less than one-third of the $90 million fee for their work on the Delaware lawsuit over a few months, Musk, the world's wealthiest individual who oversees Tesla Inc and SpaceX, deemed the payout as "unconscionable."

"Wachtell arranged to effectively line its pockets with funds from the company cash register while the keys were being handed over" to Musk, the complaint said.

Musk is seeking to recover the "excessive" fees that were charged by Wachtell under an agreement signed on the day of the buyout's completion. This agreement involved one of Wachtell's partners and Twitter's chief legal officer, Vijaya Gadde. 

The complaint also included a statement from former Twitter director Martha Lane Fox, who, upon discovering the amount that the lawyers would be paid, emailed the company's general counsel, Sean Edgett, exclaiming, "O My Freaking God."

Wachtell has not yet provided a response to the requests for comment. It's worth noting that Vijaya Gadde, Martha Lane Fox, and Sean Edgett are not directly involved in the lawsuit.

Since Musk's acquisition of Twitter, the social media platform has faced numerous lawsuits or legal threats. Among these legal actions are lawsuits filed by landlords, vendors, and consultants who claim that Musk has failed to pay them for their services. 

Additionally, there has been a reported threat of litigation from Twitter against Mark Zuckerberg's Meta Platforms concerning the latter's new Threads app.

Wachtell has previous experience dealing with lawsuits from billionaires regarding buyouts, as demonstrated by their years-long litigation with Carl Icahn over his hostile takeover of CVR Energy in 2012.

In 2018, a judge dismissed a malpractice claim brought by Icahn. The claim arose from Icahn being obligated to pay higher fees to the banks that assisted in defending CVR against the takeover, despite the merger ultimately being unsuccessful.

The case, identified as X Corp v Wachtell, Lipton, Rosen & Katz, is currently being heard in the California Superior Court, specifically in the County of San Francisco. The case number is CGC-23-607461.

 

(With inputs from Reuters)

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Technology News and Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 08 Jul 2023, 12:58 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App