Judge halts Elon Musk-Twitter litigation to allow time to finance $44bn takeover

Judge halts Elon Musk-Twitter litigation to allow time to finance $44bn takeover

If the deal does not close by 28 October, a November trial will be scheduled

A portrait of Elon Musk against a Twitter logo in the background.

A Delaware judge has postponed the Twitter v Elon Musk trial in order to give the Tesla chief executive time to complete his proposed $44bn takeover of the social media platform.

The litigation was halted until 28 October to allow both parties to close the transaction, after Musk said he needed time to put together the funds for the deal. Judge Kathaleen McCormick said if the deal did not close by her deadline the parties were to contact her to schedule a November trial.

“This action is stayed until 5pm on October 28, 2022 to permit the parties to close on the transaction,” wrote McCormick.

Twitter and Musk were scheduled to face off in a trial in Delaware on 17 October. However, Musk had moved to head off the proceedings on Monday by performing a U-turn on his decision to walk away from the takeover. Twitter had sued Musk in Delaware, where the company is incorporated, in a bid to force him to complete a deal he agreed to in April.

The decision by Judge McCormick marked another day of drama for the Twitter takeover saga.

In a filing at the Delaware court of chancery earlier on Thursday, Musk’s representatives had argued the deal could close on or about 28 October without a trial. The alternative, the filing added, was a deal-closing process that could take months – even if the trial goes ahead and Twitter wins.

Twitter said that as part of his renewed offer, the Tesla CEO was asking to reserve the right to resurrect a lawsuit against the company if the closing does not happen.

Musk’s lawyers argued, however, that “Twitter will not take yes for an answer.” The Musk filing added: “Astonishingly, they have insisted on proceeding with this litigation, recklessly putting the deal at risk and gambling with their stockholders’ interests.”

The filing said Musk’s lenders were “prepared to honor” their obligations and accused Twitter of “baseless speculation” about the $12.5bn financing package falling through.

However, the filing said finalising the debt package “will take time” and “cannot happen before the October 17 trial.” The filing also refers to the “much less likely possibility” of the debt not being funded.

Twitter responded by demanding its “day in court”. In its response, the company said the obstacle to putting off the trial was that Musk is still refusing to accept his “contractual obligations”.

Twitter said Musk’s surprise proposal to close the deal included unacceptable clauses and was an “invitation to further mischief and delay”.

“Until defendants commit to close as required, Twitter is entitled to its day in court,” said the company.

Musk had been due to be interviewed under oath by Twitter’s lawyers on Thursday as part of preparations for the trial, but the social media company had agreed to defer the Tesla CEO’s deposition.

Brian Quinn, a professor at Boston College law school, said: “The judge is giving him enough, responding to what might appear to be reasonable requests to delay the trial, while keeping the threat of a trial out there.”

Shares in Twitter closed down 3.8% at $49.39.