Elon Musk’s decision to pull out from his plan to purchase Twitter in a $44 billion deal could have very serious repercussions if things don’t go his way.
Soon after Twitter filed a lawsuit against the eccentric billionaire, claiming that he breached his deal to purchase the social media giant, speculation has started to swirl about what could happen if the court rules against him and will force him to buy Twitter. Will he comply?
Speaking with Business Insider, law professor Robert Miller said that the Delaware Chancery Court where Twitter is suing Musk has “very strong power” to force compliance, noting that imprisonment is a possibility but would be “a last resort” in this case.
While the outcome of the case is yet to be determined, Miller says it is highly implausible that the judge will rule in Musk’s favor on his core argument that Twitter is in breach of the deal because it allegedly failed to hand over all the information about bots that Musk demanded.
“I’m as sure of anything that I ever have been as a lawyer, he’ll be ordered to specifically perform, if indeed he’s in breach of the agreement,” Miller said.
If Musk is ordered to specifically perform, that means he will be ordered to fulfill his contractual duty to acquire Twitter for the agreed $44 billion price he originally proposed.
In enforcing a ruling, the court could appoint a Special Master who would act on behalf of Musk if he refuses to comply. Should this not work, the court could treat the Tesla shares that Musk owns as property, as the electric automaker is incorporated in Delaware just like Twitter. The court could then seize these shares and hand them over to Twitter.
The court could also impose fins it deems as “just and reasonable,” potentially in the millions of dollars for every day that Musk fails to comply.
“Could they fine Musk $100 million a day until he complied? Yes they could,” Miller added. “If you want to get the attention of the world’s richest man, you can do that.”
The last resort for the court would be to hold Musk in contempt for disobeying an order, providing it with the power to imprison him.