Earlier this week, Elon Musk’s legal team filed a lawsuit against the law firm that represented Twitter during Musk’s attempt to take the company private last year.
The lawsuit claims that Twitter’s former law firm, Wachtell, Lipton, Rosen and Katz, ran up a $90 million “last minute” legal cost after being acquired by Musk.
After Musk backed out of his $44 billion plan to take Twitter private, Wachtell represented the company. The legal firm was compensated with a $90 million fee for its contribution in arranging the transaction, which was offered at a large premium to Twitter’s market value and was completed in November 2022.
Twitter’s holding company, X Corp., has filed a lawsuit demanding reimbursement for “any associated excess fee payment” and related litigation costs. Musk’s company is represented by Reid Collins & Tsai, a litigation boutique based in Austin, Texas.
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Musk’s comment on twitter
Wachtell brags about how many former Delaware judges work at their firm. They specialize in institutionalized corruption.
— Elon Musk (@elonmusk) July 7, 2023
This isn’t the first time Musk has attempted to prevent payment to Twitter’s suppliers. Twitter was sued at least 26 times for vendor non-payment after Musk took control and burdened the company with $13 billion in debt, according to the online court records database Plainsite. Reportedly, the company has stopped paying Google for the usage of the Google Cloud infrastructure and has as well ceased paying rent at its San Francisco headquarters.
The recent lawsuit targets a prominent American law firm. In June of 2022, Wachtell made a proposal to represent Twitter. The firm has handled hundreds of firms and investment vehicles in similar situations.
In an email addressed to senior Twitter executives, Wachtell partner Ben Roth said, “We would be extremely interested in representing Twitter in preparing” for the possibility that Musk would renege on his contract. Among the Twitter executives involved in engaging Wachtell is the company’s former general counsel and former finance chief.
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Musk’s effort to withdraw from the Twitter agreement was unprecedented and ultimately fruitless. After he had already agreed to the terms, he claimed that the corporation had lied to him about how many spam and fake accounts were on the platform. Twitter filed a lawsuit against Musk for breach of contract, and Musk ultimately settled out of court, buying Twitter for the originally agreed-upon price.
The case was heard in Delaware’s chancery court, which is specifically designed to handle corporate litigation. Part of Wachtell’s pitch to Twitter was its sophistication in Delaware courts.
The case is X Corp v Wachtell, Lipton, Rosen & Katz, in the California Superior Court (County of San Francisco), Case No. CGC-23-607461.