July 15 (Reuters) – The judge overseeing Twitter Inc’s ( TWTR.N ) $44 billion lawsuit against Elon Musk has a solid reputation and the distinction of being one of the few lawyers ever to order a reluctant buyer to close US Corporate Merger.
Kathaleen McCormick took on the role of chancellor, or chief justice, of the Court of Chancery last year, the first woman in that role. On Wednesday, she was assigned the Twitter case, which is trying to force Musk to complete his deal for the social media platform, in what promises to be one of the biggest legal battles in years.
“She already has a track record of not putting up with some of the worst behavior that we see in these areas when people want to get out of deals,” said Adam Badawi, a law professor who specializes in corporate governance at the University of California, Berkeley. . “She’s a serious, no-nonsense judge.
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In contrast to Musk’s brash and erratic demeanor, she is known as soft-spoken, approachable and kind, but also someone who stands her ground. She advocates respect among litigants and integrity in legal conferences.
“We’ve always looked out for each other, we’ve always gone out for drinks after arguments, and we’ve maintained that level of civility,” she said at a meeting at the University of Delaware this year.
After weeks of confrontational tweets suggesting Twitter was hiding the true number of fake accounts, Musk said Friday he was ending his $54.20 stake acquisition of Twitter, worth $44 billion. On Tuesday, the social media platform filed a lawsuit. Read more
Judges have ordered reluctant buyers to close corporate acquisitions only a handful of times, according to legal experts and court records. One of them was McCormick.
McCormick caught the attention of Wall Street traders last year by ordering an affiliate of private equity firm Kohlberg & Co LLC to close its $550 million purchase of cake decorating products maker DecoPac Holding Inc.
She described her decision as “scoring a victory for the security of the deal” and rejected Kohlberg’s arguments that it could be pulled due to lack of funding.
The case has many parallels with the Twitter deal. Like Musk, Kohlberg said he was stepping down because DecoPac was violating the merger agreement. Like Musk, Kohlberg argued in part that DecoPac failed to maintain normal operations.
There are also differences. Musk’s deal is much larger, includes a publicly traded Twitter target, and could have ramifications for Tesla Inc, the electric vehicle maker that is the source of much of Musk’s wealth.
On other occasions, she has sided with shareholders when they have clashed with management.
Last year, she blocked energy company The Williams Cos Inc from adopting a so-called poison pill measure, saying it violated their fiduciary duty to shareholders.
Last month, she said Carvana Co ( CVNA.N ) shareholders could sue the board for a direct offering of stock to select investors when the share price was depressed during the early pandemic.
A graduate of Notre Dame Law School, McCormick began her career at the Delaware branch of the Legal Aid Society, which helps low-income people navigate the court system.
She went into private practice “mainly for financial reasons,” she told the Delaware Senate during her confirmation hearing, joining Young Conaway Stargatt & Taylor, one of the state’s premier business litigation firms.
She joined the Court of Chancery in 2018 as Vice-Chancellor and became the first woman to lead the Court of Chancery last year.
Despite her soft-spoken demeanor, Eric Talley, who specializes in corporate law at Columbia University Law School, said he doubts McCormick will be intimidated by Musk.
“I wouldn’t bet on Chancellor McCormick suddenly going weak,” he said.
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Reporting by Tom Hals in Wilmington, Delaware and Hyun Joo Jin in San Francisco; editing by Noeline Walder and Jonathan Oatis
Our standards: The Thomson Reuters Trust Principles.
Tom Hals
Thomson Reuters
Award-winning reporter covering US courts and laws from the COVID-19 pandemic to high-profile criminal trials and Wall Street’s biggest failures with more than two decades of experience in international financial news in Asia and Europe.
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