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Comment by shuckles | Hacker News Reader

Twitter has already said they'll sue for specific performance: https://twitter.com/btaylor/status/1545526087089696768

My heart sank when I read your comment: why on earth would the board sue for specific performance!? But my reading of the statement in the tweet is that they plan to sue for enforcement of the agreement which I believe means paying the agreed-upon penalty for backing out of the deal. I don’t at all read that statement as a plan to seek specific performance.

> closing the transaction on the price and terms agreed upon

They're definitely suing for specific performance, and I'm not sure they really have any other option at this point. It would be by far in their best financial interest if they can force closing the sale, and Musk's objections seem really thin. Doing anything less than that is complete capitulation

I can see them reaching a settlement to agree to cancel the deal with Musk if he agrees to pay a significant penalty ($5B+), or maybe agree to reduce the purchase price some, but why not sue for specific performance if you think you'll win?

Is his “financing secured”? It just seems like an incredible (and incredibly risky) long shot to me: a judge actually ordering a sale to an unwilling buyer (and Musk, of all buyers!) is a long shot and the big banks going through with funding such a big deal to an _unwilling_ owner is a long shot. But _even_if_ both of those two unlikely things happen what happens when the judge orders specific performance and Musk just... doesn’t? (Not usually a risk you have to factor in but with Musk I think this is absolutely a real possibility. Maybe even the most likely possibility.) Will they issue a warrant for his arrest? A daily fine for contempt? That would be the deal of the century for Musk.

I don’t know the right answer when you’re dealing with a megalomaniac like Musk but I really don’t think specific performance is it.

I am cautiously optimistic that whatever it is Musk is up to will eventually give rise to some cool new federal securities laws. Maybe even some new federal crimes! (Who am I kidding, a crime that only the wealthiest of the wealth would even be able to commit? Not in a million years!)

Not a lawyer, but I expect that given a verdict a judge can and will attach assets to force compliance. The court could order Musk to sell Tesla shares to raise the necessary funds, and seize the shares to do so itself even if he won't.

I’m not a lawyer, and I suspect this gets into old and bizarre traditions of equity.

But the damages for failure to perform may conceptually straightforward: the difference between TWTR’s market cap and the deal price * number of outstanding shares. Which is over $10bn.

But TWTR’s market cap is and will be influenced by Musk’s series of actions and announcements. Both parties would have to come up with a hypothetical number for how much TWTR is worth if Musk walks away without paying anything, and there’s no way their estimates would come close.

That’s Musk’s fault. The market cap will be calculated the way it would in any other scenario. You’ve just made up some weird rule that doesn’t exist.

> A daily fine for contempt?

Probably a large one.

But if Tesla shares tank, and the other investors bail out, perhaps he just doesn't mechanically have the funds to do so.

When normal people agree to spend more than they have that normally ends up in bankruptcy and liquidating most assets other than a few exceptions. Obviously that won’t happen here because the rich have a different set of laws but on the surface he either has the assets to pay it off or would have to sell everything he had and start over

What specifically would prevent this?

De jure? Nothing, as written the law applies equally to all.

De facto? Just observe how often the rich are convicted for their crimes. Even in the rare cases that they are jailed, the severity of the sentence is usually much lower than the common man. Look at Musk himself, he already agreed to not tweet about tesla without the boards approval in an agreement with the SEC to avoid punishment, then routinely ignored it and just fought them in court until he won. Our system allows for anyone with enough money to run out the clock until they either win, the other side gives up, or the situation no longer matters and the case is dropped.

Money lets you put weight on the scale to tip it in your favor, but it doesn't let you fully control the outcome. Especially because in this case Musk screwed over other rich people.

I’m being a little bit flippant here and I apologize in advance if it comes off as abrasive, but I think this image shows a good example of the difference between how regular people interact with the law, how the upper class interact with the law, and how the Uber wealthy like musk interact with the law[1].

If you have what is effectively infinite money as far as the system is concerned, you can break through any barrier

[1] https://qph.fs.quoracdn.net/main-qimg-954cf5204ca388a11909bb...

> until he won

He won. He prevailed. In court. Whatever you think he did that violated the SEC's order, is not correct, at least in the eyes of the judge or the jury who heard all the evidence and decided the case.

Rich people do have the benefit of hiring excellent lawyers and affording every available opportunity to appeal. But that is not being "above the law," that is the law. At the end of the day, if Musk won even on the 10th appeal or whatever, then you can't say that he committed a crime.

Is there are some sort of stats to observe? Genuinely curious

If you are requesting stats to observe this then I believe you either need to start looking around more in how your society runs or you are sealioning[1] me.

This is like asking for proof that the sky is blue. Perfectly acceptable in an academic context where the laws of physics are being defined at an extremely technical level. However if you’re asking a question like this in the context of every day life, it’s difficult to believe that you are asking in good faith.

[1] https://en.m.wikipedia.org/wiki/Sealioning

I'm asking in good faith, of course. You wrote "just observe how often", and "how often“ is measurable. So there must be a record. I don't observe much crimes at all in my everyday life. Likely my life is not a good sample, but it just to point out to the obvious fact that what you belive to be an obvious fact may not be an obvious fact, but a political bias instead

“How often” as used in colloquial English is not measurable because colloquial English is not a technical language and this isn’t a technical discussion.

Finding examples of the rich getting away with crimes that regular people do not get away with is a simple google search away which is why you come off as sealioning.

On the off chance that you are legitimately asking, here are a few examples

[1] https://www.forbes.com/sites/clareoconnor/2014/06/09/s-c-joh...

[2] https://en.m.wikipedia.org/wiki/Affluenza

[3] musk agreeing to stop tweeting about tesla without board certification of the tweet and then doing so anyway

>"How often” as used in colloquial English is not measurable

So what "observe how often" means then in your colloquial English?

I legitimately asked about stats. On this forum I presume you know what it is, how it's different from anecdotes. And it makes your behavior look not particularly honest.

You could have sincerely answer: "I have no data, but I have a gut geeling/impression" - that would spare you from wiggling around, and claiming that English is not to express facts.

Let me be clear here then, “how often” for me is any time the law protects the rich at an extent that the rest of the citizenry do not get.

Did you ignore the links? The Johnson and Johnson heir is anecdata yea but the affluenza defense is an actual used in the court and accepted defense. I don’t need stats in this case when I can point to a single legal precedent

When you start arguing English instead of backing up claims it’s time to admit you’re talking out your ass

Don’t agree, he made a claim on the intent of my words that does not exist. I’m not required to accept it just because you don’t like defining terms.

Additionally did you ignore the links I provided with evidence?

The links you provided weren’t evidence to your claim of systemic corruption in the United States

K bud

No it isn’t like asking for proof that the sky is blue. You are making an objectively false claim, that people toss it around all the time and/or you truly believe does not change that.

“Look how often” is a subjective English term people use to ask people to look at the situation and not an invitation to provide statistical analysis. Given that the rule of law is supposed to be applied equally I am pissed at even a single instance but here I provided you with both a link to a case where the protection due to their wealth was terrible in the magnitude of the protection and then a link to the legal defense admitted into court explicitly defining that they needed extra protection due to their wealth.

But let’s get to the heart of where I expect you to take this thread.

Is there any sort of evidence that you would accept that the rich get greater protection in our legal system? Or is it just not possible in your world view?

The rich don’t have a different set of laws they just have better lawyers.

Any law that carries a fixed fine and no jailtime is a law that rich people can break with abandon, yet would ruin a poor person. A $50 parking ticket is a major burden for a person making minimum wage (essentially a day of their life to recoup that); whereas for a rich person their money makes that amount for them in less time than it took me to write this post.

Or, from another perspective: “The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread.”

And what provides for the rich to acquire better lawyers that can produce a better outcome but the laws? Why is everyone not provided a state defender rather than letting the rich purchase the best talent?

Worst case Musks tantrum over some tweet will tank Tesla, ruin himself and maybe even impact his other ventures. Basically he might just bring over himself what every shortseller predicted years ago would happen.

I believe I have seen exponentially growing daily fines for contempt.

Besides, you can jail people for contempt.

Probably instead of arresting Musk they just sieze assets to cover the damages. His assets are mostly on paper anyways.

Twitter has a binding agreement to get its shareholders cash at a price that’s nearly 50% higher than todays closing price, a value that the board concluded was superior to their standalone prospects and other alternatives. Why wouldn’t they enforce the agreement and close the deal?

Because it will takes years to enforce and in the meantime Twitter will have bad headlines and huge operational challenges? At best, they are likely to get the break-up clause which would not offset the damage such legal proceedings would cause over the duration of XX months.

Running Twitter into the ground for 50 a share sounds like a great deal for shareholders. Heck, given the cesspool that Twitter is, it might even be good for society.

It would suck for Musk and his financers, but they have a simple alternative: stick to the agreement they signed. It's not like the risks of merger agreements are unknown. And the waiving of due diligence wasn't a minor, easy to miss, point either.

Musk wants to back out because of price. He cannot, and he is throwing the equivalent of a tantrum.

I do hope this doesn't end up with Musk losing control of spaceX. Some actual quality is comming out of there.

He's not going to have to buy twitter, it's that simple. He has multiple avenues of getting out of it.

The contract does not give many avenues. It is either a 'materially adverse effect', 'breaking a covenant', or not being able to get the loans he wanted lined up.

-Materially adverse effects are not within play here. The threshold for that is really high.

-The loans are committed. Banks have signed for the loan, and they can't get out of it.

- That leaves the covenants. That is the main approach Musk is trying, but it is a stretch.

The only other avenues to get out are:

- Get Twitter to amend the contract - Ignore the contract

Threatening to try the second (which would really suck for twitter, even if it almost certainly won't work) might be a way to get twitter to do the first. But I get the sense that the board feels they have a strong position. Moreover the board is likely getting a lot of pressure from shareholders to not give in to Musk.

Such as?

Settling for an amount between his agreed upon acquisition price and the current market value, basically paying Twitter owners billions for nothing.

Doesn’t seem like getting out of it to me

Twitter will sue for specific performance because (a) they're entitled to it and (b) it's worth substantially more than the reverse breakup fee.

It’s not a penalty for backing out of the deal, it’s compensation if his financing falls through. Musk doesn’t have a discretionary out here.

The agreed-upon penalty is when both sides mutually back out of the deal. But right now Twitter's board thinks it can get a lot more out of Musk than just $1B, and my understanding is that the board is likely correct.

They are absolutely suing to compel performance at the accepted price.

It will eventually settle. If they sue and win Musk's financing will have long backed out so they aren't going to end up with enough to close the deal.

I suppose they could force him into bankruptcy which would end up with his ownership stakes in Tesla and SpaceX sold off. Given how much of a loose cannon he's become that would probably be better for other shareholders but who knows.

> I suppose they could force him into bankruptcy which would end up with his ownership stakes in Tesla and SpaceX sold off.

I wouldn't mind watching Twitter do this to him out of spite.

From what we've seen so far, I doubt the Twitter board would do that. I guess they are suing because that's what the shareholders are pushing for.

And those shareholder's wouldn't like to get a piece of Tesla and / or SpaceX in exchange for Twitter? At, what, 40 billion evaluation of Twitter? Sure as hell I would push the board of Twitter to sue for that if I were a Twitter share holder.

> I suppose they could force him into bankruptcy which would end up with his ownership stakes in Tesla and SpaceX sold off.

I don't think they'd need to force him into bankruptcy. If a judge awards Twitter (say) $10 billion in damages, there are many avenues to seize enough of Musk's assets to pay without making him bankrupt.

Well the best case for Twitter isn't $10bn in damages, it's forcing him to go through with the the entire original $44bn deal.

Elon's net worth has already fallen by $65bn in the past few months - I'd imagine the valuation of his assets will fall quite a lot more once it becomes known he's going to have to offload $44bn worth of Tesla and/or SpaceX to finance a bad deal.

Elon won't be bankrupt in the colloquial sense of financially ruined, but if he's forced to go through with deal and is unable to finance it he will have to liquidate an enormous amount of assets - and many of his assets are already collateral for existing loans.

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