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CNN Business
—
The judge overseeing the acquisition dispute between Elon Musk and Twitter on
Thursday ruled to pause the legal proceedings until Oct. 28 following a request
from the Tesla CEO, meaning the trial that was set to begin Oct. 17 will not go
ahead as planned.

Twitter had opposed Musk’s motion to stay the proceedings and raised concerns that
he might not follow through on his word to quickly close the deal.

“If the transaction does not close by 5 p.m. on October 28, 2022, the parties are
instructed to contact me by email that evening to obtain November 2022 trial
dates,” the judge, Delaware Chancery Court chancellor Kathaleen St. Judge
McCormick, said in the order.

Lawyers for Elon Musk on Thursday filed a motion to stay the legal proceedings in
its dispute with Twitter and to remove from the court’s calendar the trial that had
been set to begin Oct. 17, noting “changed circumstances that have effectively
mooted this action,” according to a Thursday court filing.

The filing — which says the stay is “pending the closing of the transaction” —
comes after Musk earlier this week proposed proceeding with the $44 billion
acquisition of Twitter at the originally agreed upon terms after having spent
months trying to get out of the deal.

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The filing states that Musk is “willing to close the transaction at $54.20, the
Debt Financing parties are working cooperatively to fund the close, and closing is
expected on or around October 28.”

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But the filing also alludes to resistance from Twitter to halt the legal
proceedings. “Twitter will not take yes for an answer. Astonishingly, they have
insisted on proceeding with this litigation,” according to the letter.

Lawyers for Twitter issued a sharp response to Musk’s filing. “The obstacle to
terminating this litigation is not, as Defendants say, that Twitter is unwilling to
take yes for an answer,” the letter states. “The obstacle is that Defendants still
refuse to accept their contractual obligations.”

It notes that for months, Musk has been attempting to exit the deal and “now, on
the eve of trial, Defendants declare they intend to close after all. ‘Trust us,’
they say, ‘we mean it this time.’”

“Until Defendants commit to close as required, Twitter is entitled to its day in

Court,” Twitter’s letter states. “Defendants can and should close next week. Until
they do, this action is not moot and should be brought to trial.”

The back-and-forth offers the clearest indication yet that Musk’s financing may now
be the central issue in the dispute between the Tesla CEO and Twitter over halting
the legal proceedings and completing the deal. Musk has previously said he would
pay for the acquisition through a mix of debt commitments from financial
institutions, equity financing from investors and his own assets.

But legal experts have raised concerns that debt financiers may now want to pull
out of the deal in light of recent changes to the debt market and declines in value
of social media companies. Twitter, according to experts, would likely want to
maintain the litigation as pressure on Musk unless he agrees to close the deal with
or without the debt financing.

In the Thursday filing, Musk’s legal team stated that Twitter has resisted a stay
based on concerns that Musk has made his offer to close the deal contingent on the
receipt of the debt financing, and that payment could fall through. “Counsel for
the debt financing parties has advised that each of their clients is prepared to
honor its obligations,” Musk’s filing states.

The filing asks the court to stay the proceedings and order Twitter to complete the
deal.

“Proceeding toward trial is not only an enormous waste of party and judicial
resources, it will undermine the ability of the parties to close the transaction,”
the filing states. “Instead of allowing the parties to turn their focus to securing
the Debt Financing necessary to consummate the transaction and preparing for a
transition of the business, the parties will instead remain distracted by
completing discovery and an unnecessary trial.”

In its response letter, Twitter’s lawyers state that Musk’s team has refused “to
commit to any closing date.” It added that a representative for one of the banks
set to lend to Musk testified Thursday morning that “Mr. Musk has yet to send them
a borrowing notice and has not otherwise communicated to them that he intends to
close the transaction, let alone on any particular timeline.”

Twitter’s lawyers added: ‘Defendants should be arranging to close on Monday,

October 10.”

Earlier Thursday, lawyers for Musk and Twitter agreed to postpone the Tesla CEO’s
deposition in the court fight, a source familiar with the negotiations told CNN.
Musk’s deposition had been set to begin Thursday, per a notice filed earlier this
week. It’s not clear whether a new date has been set for Musk’s deposition, but
Twitter could end up pushing to complete it early next week if a deal is not
reached.

As of Wednesday, the two sides had yet to reach a deal to close the acquisition, a
separate source told CNN. Delaware Chancery Court chancellor Kathaleen St. Jude
McCormick, the judge who is overseeing the litigation, said in a Wednesday court
filing that neither side had filed to stay the proceedings and she was continuing
to prepare for trial to begin on Oct. 17.

On Thursday, McCormick filed a letter to both sides laying out deadlines for
responding to discovery motions, noting that the “trial is fast approaching.”

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