Twitter’s parent company on Friday sued a leading law firm for allegedly unfair payments in connection with Elon Musk’s $44 billion acquisition of the social media company last year.
A $90 million payment Twitter made to Wachtell, Lipton, Rosen & Katz, a leading M&A firm, amounted to “unjust enrichment” and would have to be refunded, according to the lawsuit filed by its parent company, X Corp., had sued. in San Francisco Superior Court.
According to the lawsuit, Wachtell Lipton “took money from the company’s cash register while handing over the keys” to Mr. Musk, owner of X Corp.
Twitter’s previous management hired Wachtell Lipton after Musk tried to end his agreement to take over the company last year. He was unsuccessful and the purchase was completed in October.
Wachtell Lipton and a Twitter spokesperson did not respond to requests for comment.
Twitter has disputed other fees related to Mr Musk’s purchase of the company. A consulting firm, Innisfree M&A, sued Twitter in February for $1.9 million over unpaid bills. Joele Frank, a PR firm, sued Twitter in May, arguing that it failed to pay approximately $830,498 for services provided in the deal.
Wachtell Lipton is one of the best-known law firms on Wall Street and has advised on high-profile deals, including Mr. Musk to take Tesla, his electric car company, private in 2018. the law firms with the highest profit per partner.
The company has been sued before. In 2018, activist investor Carl Icahn Wachtell sued Lipton for working on his 2012 hostile attempt to take over CVR Energy. The suit was rejected.
According to documents filed with Friday’s lawsuit, Twitter’s board of directors and executives approved the $90 million payment because Wachtell Lipton and one of his attorneys, William Savitt, had managed to get Mr. force Musk to abide by his agreement to buy the company.
By approving the payment, Twitter’s former executives and board breached their fiduciary duty, the lawsuit said. Twitter’s board rushed to close the deal with Mr Musk and did not act “cautiously” or “on an informed basis,” the lawsuit said.
Wachtell Lipton received most of the $90 million fee just 10 minutes before the deal closed in October, the lawsuit said. Within minutes of Wachtell Lipton receiving that reassignment, Musk fired some of Twitter’s top executives, including the Chief Legal Officer and General Counsel, according to the indictment.
Yiwen Lu reporting contributed.