Twitter’s parent company sued a leading corporate law firm on Friday, alleging it made unfair payments in Elon Musk’s $44 billion acquisition of the social media company last year.
Twitter’s $90 million payment to top M&A firm Wachtell, Lipton, Rosen & Katz constituted “unjust enrichment” and should be repaid. litigationparent company X Corp. filed a lawsuit in San Francisco Superior Court.
Wachtell Lipton withdrew funds from company cash registers “while handing over the keys” to X Corp. owner Musk, the lawsuit said.
Twitter’s former management hired Wachtell Lipton after Musk tried to terminate a deal to buy the company last year. But he was unsuccessful, and the takeover closed in October.
Wachtel Lipton and a Twitter spokesperson did not respond to requests for comment.
Twitter disputed other costs associated with Musk’s acquisition of the company. In February, Innisfree M&A Consulting sued Twitter for $1.9 million for failing to pay its bills. Joele Frank is a public relations firm, sue twitter In May, the company argued that it had not paid approximately $830,498 for services rendered in the transaction.
Wachtell Lipton, one of Wall Street’s most prominent law firms, has advised on some high-profile deals, including Musk’s failed attempt to take his electric car company Tesla private in 2018. The company charges high fees, cementing its position in the industry.law firm with highest profit each partner.
The company has previously been sued. In 2018, activist investor Carl Icahn sued Wachtell Lipton for its role in the 2012 hostile takeover of CVR Energy. The lawsuit was dismissed.
Twitter’s board of directors and executives approved the $90 million payment after Wachtell Lipton and one of its lawyers, William Savitt, succeeded in keeping Musk in compliance with an agreement to buy the company, according to a lawsuit filed Friday.
The lawsuit alleges that Twitter’s former executives and board violated its fiduciary duty by approving the payment. The lawsuit alleges that Twitter’s board rushed to strike a deal with Musk and did not act “carefully” or “on an informed basis.”
Wachtell Lipton received most of the $90 million in fees 10 minutes before the October deal closed, the lawsuit said. Within minutes of Wachtell Lipton’s transfer, Musk fired some of Twitter’s top executives, including its chief legal officer and general counsel, the lawsuit said.
Yiwen Road contributed to the report.