“He’d be treated like a deadbeat dad not paying child support,” Minor Myers, a professor of UConn School of Law in the US was quoted on the question of what will happen if Elon Musk resists a court order to buy Twitter.
After Tesla CEO Elon Musk decided to walk away from the headline grabbing Twitter takeover, the microblogging platform has entered a legal battle. Twitter Inc has sued Musk to force him to carry out the proposed $44 billion acquisition.
But can the world’s richest man, who is regularly seen taunting securities regulators, defy a court order? But first, let’s understand if Twitter can really get a court to force Musk into buying the company.
Can a court force Musk to buy Twitter?
Twitter is asking a court in Delaware to grant “specific performance” under the terms of the contract it has with Musk. This means asking the court to force Musk to complete the deal at the agreed price of $54.20 per share.
This is not new as such orders have been issued by the court before. An example is a 2001 order to Chicken processing company Tyson Foods Inc to complete a $3.2 billion deal it had with meatpacking company IBP Inc. There have been other instances.
However, this is the first time that the order is being sought against an individual rather than a company. Furthermore, such an order has never been granted on a deal of this magnitude.
What will happen if Musk defies a court order?
The court in Delaware where the lawsuit will be heard is specified in the Musk-Twitter deal for disputes. The city of Delaware is also a preferred place for public companies in the US to get incorporated. Musk’s companies - Tesla, SpaceX and Boring Co are all incorporated in Delaware. This gives the court jurisdiction over a substantial amount of assets of Musk, and thus leverage to coerce the tycoon into compliance if the need arises.
As per lawyers, the court will start by first holding Elon Musk in contempt and issue fines until he complies with the order.
"The court has capacious powers to enforce its orders," Francis Pileggi, an attorney with Lewis Brisbois in Wilmington, Delaware was quoted by Reuters. Continuing to defy the order could result in the Court ordering his assets to be frozen or shares be turned over.
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(With inputs from Reuters)
