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Comment by daenz | Hacker News Reader

>the court will take his assets to compensate.

How do you seize billions of dollars of stock without affecting share prices?

It doesn't matter if they're affected. A judgement is going to be for a dollar amount. A court will rule that Musk must pay twitter X billion dollars. Twitter can then pursue Musk, taking basically anything he owns in terms of business.

They could contact the broker holding his shares and restrain them, order them sold, and collect the proceeds.

They could seize and sell at auction the real property of any of his businesses. SpaceX rockets? Office chairs? Servers? Anything.

All of this enforcement costs money. Twitter would account for the money spent seizing assets and charge those expenses to Musk as well.

Assets seized in this way (including stock) are often sold for much less than they're ideally worth. It's Musk's problem. Twitter would be empowered to seize seize seize until they've raised enough cash to cover the judgement plus expenses.

> They could seize and sell at auction the real property of any of his businesses. SpaceX rockets? Office chairs? Servers? Anything.

They could not, because he does not own those businesses outright. Doing so would violate the other owners rights. They can seize his shares in SpaceX, but not SpaceX property.

Sure. The particular way the assets are seized depends on a number of different technical details.

But the end result is always the same. You can either voluntarily liquidate and pay your judgements or you can have someone else do it for you.

I’m having it hard taking you seriously given you making such a basic mistake of thinking they could seize spacex property directly. What industry do you work in?

Oh give me a break. Property of a privately owned company can be directly seized.

I have not done an analysis on exactly which of Musk's private companies are jointly owned, and how the ownership is structured. It's a comment on hn for crying out loud.

SpaceX is well known to have a bunch of investors. Put a little effort in before explicitly calling out that the government could seize rockets. It’s as silly as saying they could start just taking Model 3s from the Tesla factory to get their money back.

I think you're misunderstanding. It's absolutely possible to seize rockets, or model 3s, etc. That part isn't silly at all.

The only question is regarding which entity is liable. If a judgement were entered against SpaceX, for example, then absolutely rockets and real property owned by SpaceX can be directly seized.

Without looking, I'm certain there are at least a few companies owned by Musk which could have their assets taken directly.

We’re talking about Elon, not spacex. I don’t get how you’re confusing the two so easily. You claimed they can seize spacex property for Elon debt, which is 100% unadulterated bullshit.

If they take all of Musk's shares in SpaceX and acquire a voting majority, they can then use those shares to vote to sell off the company's assets at the next board meeting.

That would almost certainly be a breach of fiduciary duty to the minority shareholders.

Not really. All shareholders are paid out in proportion to share ownership. Musk’s share goes to Twitter.

This is why going behind on a mortgage can absolutely ruin a regular person.

They could simply keep selling Elon's Tesla stock it until they had the money to cover the court order.

Why should the court or Twitter care if they end up converting 10x more of Elon's stock to cash?

I guess some day traders would get rich (and people that had to sell for the day or so when the stock tanked would take a bath), but that's the biggest problem I can come up with.

You don’t care and keep seizing and selling off assets until you hit the target number or you run out of things to seize.

You’re acting like the asset value at all matters to the courts.

Couldn't other shareholders sue the government for tanking the stock and essentially "stealing" value from them?

They could certainly try; you can start a lawsuit without any real basis if that's how you want to spend your money.

Trying to argue, in court, that you are entitled to have your investment insulated from loss due the primary owner selling it?

>due to the primary owner selling it

We were talking about the courts seizing the assets though, it's not being voluntarily sold.

Why would that make a difference. When someone defaults on a house/car the seized asset is often sold under value, nobody has any ground to sue.

If someone's car is seized by the government, it doesn't cause the value of everyone else's cars to drop by 50%, and if it did, I think people would sue the the government.

No, they still own the stock, the government hasn’t taken anything from them. The stock might be worth less money the same way a house might be worth less money if a city government decided to stop repairing the road in front of it, or if the city relaxed zoning laws, but the price of assets in the market isn’t a responsibility of the government, and it generally does not incur liability when it causes them to change.

I think a more appropriate example would be if the government did some work around the house and in the process damaged the house, thereby lowering the value. The thing being damaged is shareholder confidence, which I thought (but IANAL) taps into different securities-related laws.

If the government damages physical property it is frequently liable for the cost of repairs, but to the extent that a share of Twitter stock represents something that can be damaged, that thing is Twitter itself. If through illegal meddling of some sort the government impaired Twitter’s ability to do business (say, for example, by flagrant targeted refusal to grant work visas), then the company or shareholders could have a cause to sue the government. The government is under no obligation to avoid impacting Twitter’s share price, especially as a side effect of some unrelated fully legitimate exercise of government power like auctioning off seized assets.

"The government" isn't doing anything here.

Elon and Twitter have a contract. Elon wants out; Twitter doesn't want to let him out; the contract only has limited conditions to allow Elon out. The court is simply deciding which of two options is the case:

1. Elon's reasons are valid; he gets out of the contract for a $1B payment.

2. Elon's reasons are not valid; he has to satisfy the contract and pay $54.20/share for Twitter.

If the judge decides in favor of #2, it is Elon's responsibility to come up with the money. (If he doesn't do so willingly, someone court-appointed will step in and do it for him.) If that tanks Tesla, that has nothing to do with the court.

Now, Tesla shareholders can sue Elon for getting the company into this pile of stank....

#3: Contract is void, performance must be undone at the expense of all parties because unjust enrichment.

It's not like the shares are destroyed or immediately sold. If anything, they are prevented from being sold under pain of contempt, so could increase prices by limiting the supply.

> without affecting share prices

Why should that be a concern?

You just continue seizing assets until the accumulated cash value realized from the sale of the assets matches the value of the financial judgement against the guilty party.

The drop in share prices as you do this is not your concern.

How does a margin call work for $500 please Alex?

Don’t invest in a company ran by a lunatic?

Twitter employees are watching the board force a lunatic to buy their company.

Because they know he has absolutely no ability to do so. They are simply trying to collect legal fees at this point.

I mean, he does though right? It’s just that doing so at this point would cause a world of hurt for Tesla and its shareholders?

I don't think so, I mean, you are not just going to place a single market order for $44bn of stock, you are going to have liquidity problems because there is not that much buy-side volume in the market, so the price must fall drastically to attract new buyers. Also I assume musk has legal obligations not to do stuff like that to begin with, as an executive with fiduciary responsibilities to shareholders. If Musk can tank Tesla, Exxon execs can dismantle Exxon to save the environment. But there's also the fact that a lot of his Tesla shares are already leveraged on loans. The most likely course would be for him to take out loans on the remaining unleveraged stock, but he doesn't have enough of that at the rates the banks are offering.

Anyway, I'm no expert on Musk, and I have almost zero interest in Tesla, or Twitter, or any of this clown show. So maybe my ballpark guesstimations of all the relevant numbers are way off. So take it all with a huge pinch of salt. I am just some uninformed spectator watching two lizards fight in the dust and speculating who will win or whatever :)

Edit: leveraged -> unleveraged, woops

All fair points.

He absolutely has the ability. He's demonstrated that publicly, with his verified presentation of having raised the $44 billion a few weeks ago (through a combination of financial instruments).

What he doesn't have is the inclination.

The Twitter board would have a tough time explaining why they didn’t enforce the rock solid agreement allowing the shareholders to sell their shares for an extreme premium.

Not just an extreme premium but an "unconditional offer" lol.

Imagine I go to mcodnalds and offer $10 for a big-mac unconditionally, lol. I'm going to get a half eaten shit sandwich and a broad grin.

But tech workers don't need unions, right. Must be fun for twitter employees to completely powerless spectators with no seat at the negotiating table while the lunatic has a chance at becoming their new King and turning their labour in to an election-swinging doomsday machine at the end of human civilisation.

But hey, we've got beanbags and a playstation.

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