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Elon Musk and Twitter lawyers to meet in court for the first time

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Tuesday’s hearing will discuss how soon the case will go to trial. When he filed the lawsuit last week, days after Musk decided to end the deal, Twitter (TVTR) also filed a motion to expedite the proceedings and requested a four-day trial period in September. Musk’s legal team opposes the proposal.

Even with this scheduling controversy, the stakes for Twitter are high. The company was already struggling to grow its user base and ad business before Musk’s involvement, and now it and many other tech companies are cutting costs amid rampant inflation and recession fears. Twitter needs a quick resolution to the Musk battle to limit uncertainty for its shareholders, employees and customers, and any impact on its business that could be exacerbated by costly and lengthy litigation.

While Tuesday’s hearing is largely procedural, it could provide insight into how each side will approach what is likely to be a convoluted lawsuit. It could also give a glimpse of how the judge overseeing this case, Delaware Chancellor Kathleen St. Jude McCormick, is approaching. dispute.

“There may be hints that she is asking what she is saying and what they are saying during the hearing that they might tell us something,” said Carl Tobias, professor at the University of Richmond Law School.

The case has already run into a bit of a snag: while the hearing was originally scheduled to take place in person, McCormick sent a letter to both parties on Monday warning them that she tested positive for Covid-19 and that the hearing would be moved to Zoom. .

Less than three months after the blockbuster acquisition deal was signed, Musk decided to terminate the deal. He accused Twitter of breaking the deal by making misleading claims about the number of bots and spam accounts on the platform, as well as allegedly withholding data Musk said he needed to assess the extent of the problem.
Last week, Twitter launched a 60-plus page counterclaim alleging that it was Musk who violated the agreement. In a suit, Twitter suggested Musto is using bots as an excuse to try to get out of a deal he is now experiencing buyer remorse after a market downturn that slammed Twitter shares as well as shares Tesla (TSLA)on which the billionaire relies in part to fund the deal.

Twitter asked the court to order Musk to complete the deal to buy the company. While many legal experts say Twitter likely has a stronger argument in the dispute, some also expect the company may end up negotiating with the billionaire if things get dragged out to reduce the disruption to their business.

As with the controversy in general, Twitter and Musk appear to be at odds over whether a speedy trial should be held. In its proposal, Twitter said the expedition was necessary to ensure the deal could be completed before the “drop-dead” October 24 date by which both parties had previously agreed to close the deal, as well as to “protect Twitter and its shareholders from ongoing market risk and operational risk.” damage from Musk’s attempt to break out of the hermetic merger deal.”

At Friday’s court hearing, Musk’s lawyers called Twitter requested an “emergency expedition” and stated that the controversy is “extremely packed with facts and experts, requiring considerable time to discover.” They also said the original agreement stipulated that the deadline would no longer apply if one of the parties filed a lawsuit over the deal, calling Twitter’s request “controversial” and asking for a trial date of February 13, 2023 or later.

Tobias said McCormick likely won’t decide whether to speed up Tuesday’s hearing, but will consider both sides’ arguments and how long pre-trial preparations, including providing evidence and agreeing on expert testimony, may take, and then publishing the decision at a later date.

“I think she will try to work on something reasonable in light of the complexity of the dispute,” Tobias said. “This court has an excellent reputation for resolving these types of litigations, and therefore it will be especially careful to give [both sides] the best possible treatment.”

In the meantime, Twitter continues to take the steps necessary to proceed with the acquisition. On Friday, the company sent out a letter to shareholders inviting them to vote on the deal to sell Twitter to Musk at $54.20 a share outstanding at a special meeting on an undisclosed date and time later this year, according to a regulatory filing. Twitter’s board had previously unanimously recommended that shareholders vote in favor of the deal, a position confirmed in the letter.

Despite Musk’s decision to terminate the deal, “we intend to complete the merger at the price and terms agreed with Mr. Musk,” the letter said Friday. “Your vote at the special meeting is critical to our ability to complete the merger.”

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