The judge in Twitter v. Musk once made a rare ruling: ordering a deal

July 15 (Reuters) – The judge overseeing Twitter Inc’s (TWTR.N) $44 billion lawsuit against Elon Musk has a no-frills reputation as well as the distinction of being one of the few jurists ever to order to a reluctant buyer to close an American Business Merger.

Kathaleen McCormick took over the role of Chancellor or Chief Justice of the Court of Chancery last year, the first woman to hold the post. On Wednesday, she was handed the Twitter lawsuit that aims to force Musk to complete his deal for the social media platform, which promises to be one of the biggest legal showdowns in years.

“She already has a reputation for not putting up with some of the worst behavior we see in these areas when people want to walk away from deals,” said Adam Badawi, a law professor specializing in corporate governance at the University of California. Berkeley. “She is a serious and sensible judge.”

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Unlike Musk’s hot-headed and unstable demeanor, she’s known for being soft-spoken, approachable and kind — but a person who also holds her own. She advocates respect between litigants and integrity during legal conferences.

“We always supported each other, always went out for a drink after an argument and maintained that level of civility,” she said at a rally at the University of Delaware this year.

After weeks of divisive tweets suggesting Twitter was hiding the true number of fake accounts, Musk said on July 8 that he was ending the $54.20 per Twitter share worth $44 billion acquisition. . On Tuesday, the social media platform sued. Read more

McCormick scheduled the first hearing for July 19 in Wilmington on Friday, when she will consider Twitter’s request to expedite the case and conduct a four-day trial in September.

Shares of Twitter were up about 2% at $37.11 midday Friday, but still more than 30% below the trade price.

Judges have only ordered reluctant buyers to complete business acquisitions on a few occasions, according to legal experts and court records. One of them was McCormick.

Last year, McCormick caught the attention of Wall Street dealmakers when he ordered a subsidiary of private equity firm Kohlberg & Co LLC to complete its $550 million purchase of DecoPac Holding Inc, which makes of cake decorating.

She described her decision as “a victory for deal certainty” and dismissed Kohlberg’s arguments that he might walk away due to a lack of funding.

The case has many parallels with the Twitter deal. Like Musk, Kohlberg said he was walking away because DecoPac violated the merger agreement. Like Musk, Kohlberg argued in part that DecoPac had failed to maintain regular operations.

There are also differences. Musk’s deal is much larger, involves a target company listed on Twitter, and could have implications for Tesla Inc, the electric vehicle maker behind much of Musk’s fortune.

Tesla shares were trading slightly Friday at $718.04, down from around $1,000 when the Twitter deal was announced.

In other cases, she sided with shareholders when they clashed with management.

Last year, it blocked energy company The Williams Cos Inc from passing a so-called poisonous anti-takeover measure, saying it violated its fiduciary duty to shareholders.

Last month, she said shareholders of Carvana Co could sue the board for a direct share offer to certain investors when the share price was depressed at the start of the pandemic.

A graduate of Notre Dame Law School, McCormick began her career with the Delaware branch of the Legal Aid Society, which helps low-income people navigate the justice system.

She went into private practice “primarily for financial reasons,” she told the Delaware Senate during her confirmation hearing, joining Young Conaway Stargatt & Taylor, one of the leading law firms in the United States. State for commercial disputes.

She joined the Court of Chancery in 2018 as Vice-Chancellor and became the first woman to lead the Court of Chancery last year.

Despite his softness, Eric Talley, a corporate law major at Columbia Law School, said he doubted McCormick would be intimidated by Musk.

“I wouldn’t bet on Chancellor McCormick suddenly getting weak,” he said.

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Reporting by Tom Hals in Wilmington, Delaware and Hyun Joo Jin in San Francisco; edited by Noeleen Walder and Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

Tom Hall

Thomson Reuters

Award-winning journalist covering US courts and law, from the COVID-19 pandemic to high-profile criminal trials and Wall Street’s biggest failures with more than two decades of international financial news experience in Asia and Europe.

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