Elon Musk announced on Friday that he was terminating the $54.20-per-Twitter share acquisition, worth $44 billion. The decision comes after weeks of confrontational tweets implying that Twitter was hiding the true number of fake accounts.
Kathaleen McCormick, the judge overseeing Twitter’s $44 billion lawsuit against Musk, is known to be very pragmatic and matter-of-fact. She has the distinction of being one of the few jurists who has ever ordered a reluctant buyer to close a US corporate merger.
McCormick was the first woman to take over the role of the chancellor or chief judge of the Court of Chancery last year. She was assigned the lawsuit on Wednesday, which aims to force Musk to complete his deal for buying out Twitter. The lawsuit promises to be one of the greatest legal showdowns 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 specialising in corporate governance at the University of California Berkeley. “She is a serious, no-nonsense judge.”
McCormick was in the spotlight last year due to a case ordering an affiliate of private equity firm Kohlberg & Co LLC to close its $550 million purchase of DecoPac Holding Inc, which makes cake decorating products.
The case mirrors several aspects of the current Twitter deal. Much like Musk, Kohlberg said it was walking away because DecoPac violated the merger agreement. Kohlberg argued in part that DecoPac failed to maintain ordinary operations, similar to Musk’s claims about Twitter.
However, one of the biggest differences is that Musk’s deal is much significantly bigger. The much talked about deal involves a publicly traded target company: Twitter, and might have implications for Tesla Inc, the electric vehicle maker that is the source of much of Musk’s fortune.
Last month, McCormick said shareholders of Carvana Co 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 started her career with the Delaware branch of the Legal Aid Society, which helps low-income people navigate the court system.
She joined the Court of Chancery in 2018 as a vice chancellor and became the first woman to lead the Court of Chancery last year.
Despite her mild manner, Eric Talley, who specializes in corporate law at Columbia Law School, said he doubts McCormick would be cowed by Musk.
“I would not be placing my bets on Chancellor McCormick suddenly becoming weak-kneed,” he said.
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