Twitter’s parent company sued a major corporate law firm on Friday over what it called improper payments related to its $44 billion acquisition of the social media company by Elon Musk last year.
Twitter’s $90 million payment to top merger and acquisition firm Wachtel, Lipton, Rosen & Katz amounts to “unjust enrichment” and should be paid back. trialWhich was filed in San Francisco Superior Court by the parent company, X Corp.
The lawsuit says Wachtel Lipton “took money from the company’s cash register while the keys were being handed over” to Mr. Musk, who owns X Corp.
Wachtel Lipton was hired by Twitter’s previous management after Mr Musk tried to terminate the deal to acquire the company last year. He was unsuccessful and the purchase closed in October.
Wachtel Lipton and a Twitter spokesperson did not respond to requests for comment.
Twitter has disputed other charges related to Mr Musk’s purchase of the company. An advisory firm, Innisfree M&A, sued Twitter in February for $1.9 million over unpaid bills. Joel Frank, a public relations firm, sued twitter in May, arguing that he had not been paid approximately $830,498 for services provided in the deal.
Wachtel Lipton is one of the best-known law firms on Wall Street, having advised on high-profile deals including Mr Musk’s failed attempt to take his electric car company Tesla private in 2018. The firm commands high fees, thereby strengthening its hold among the people. with law firms top profit per partner.
The company has already been sued. In 2018, activist investor Carl Icahn sued Wachtel Lipton over its hostile 2012 attempt to take over CVR Energy. The case was dismissed.
According to documents submitted with Friday’s lawsuit, Twitter’s board and executives approved the $90 million payment because Wachtel Lipton and one of its lawyers, William Savitt, were successful in getting Mr. Musk to abide by their agreement to buy the company. .
The lawsuit says that by approving the payments, Twitter’s former executives and board breached their fiduciary duty. The lawsuit says Twitter’s board rushed to close the deal with Mr Musk and did not act “prudently” or “based on information”.
The lawsuit says Wachtel handed over the bulk of the $90 million fee to Lipton just 10 minutes before the deal closed in October. According to the lawsuit, within minutes of receiving Wachtel Lipton’s transfer, Mr. Musk fired some of Twitter’s top executives, including its chief legal officer and general counsel.
Yiwen Lu Contributed reporting.