Twitter has sued Wachtell, Lipton, Rosen & Katz over improper payments during Elon Musk’s $44 billion takeover of the company.
The company’s previous management hired the law firm to oversee Musk’s acquisition agreement.
But now, Twitter is accusing Wachtell and its litigation department, led by William Savitt, of being at the center of excessive spending by departing Twitter executives.
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The complaint was filed in California Superior Court in San Francisco.
Twitter is seeking full restitution of the $90 million paid to Wachtell, including an unspecified “success fee” described as “extraordinary and unconscionable.”
The complaint alleges Wachtell made a last-minute adjustment to its fee structure on the day of the deal’s closing.
It claims there were instructions from the new ownership to suspend payments to third parties before the imminent merger.
Twitter claims Wachtell took advantage of the transition period to benefit financially while the company was vulnerable.
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The Twitter board reportedly approved the payment to Wachtell on the day the deal closed.
The lawsuit also names Vijaya Gadde, Twitter’s chief legal officer at the time, highlighting she signed Wachtell’s letter agreement immediately after the board’s approval.
Twitter filed the complaint under the corporate name X Corp, which the company adopted after Musk’s takeover.
Legal consultants suggest that the $90 million payment is not excessive, considering the size of the $44 billion acquisition deal.
However, Twitter argues that Wachtell’s fees should be scrutinized given their actions during the transition.
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The lawsuit includes email and memo attachments related to Wachtell’s representation of Twitter.
Musk initially agreed to acquire Twitter in April 2022 for $44 billion but later threatened to walk away from the deal before ultimately committing to the acquisition.
This decision avoided a high-stakes trial in Delaware Chancery Court, where Twitter had initially sued Musk to enforce the merger agreement’s terms.
Musk countersued, accusing Twitter of misrepresenting its business.
