Elon Musk, the world’s second-richest person, is set to face a tough scrutiny of his corporate leadership on Monday when Tesla Inc. postponed a lengthy trial over a controversial $ 2 billion acquisition of SolarCity in Delaware.
Investors and pension funds that are suing the lawsuit have complained that Musk and Tesla management violated their fiduciary duties in 2016 when they rescued Tesla SolarCity, a roofing solar panel installer. Musk is the defendant in Lone; the rest of the commission paid $ 60 million last year.
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Tesla is no longer a struggling startup. The California-based company joined the S&P 500 in December, delivering approximately 200,000 electric cars worldwide in the last quarter, and is building new plants in Austin and Berlin. The SolarCity deal seems to have little significance in the history of the $ 628 billion company’s drama. But the questions raised about conflicts of interest and responsibility remain in the shadow of Tesla’s corporate governance, with Musk trying to shake it up.
At trial, there will be no open initial statement, nor will there be a jury: the procedure is conducted before a single judge in a newly renewed court. Musk will be the first witness in the lawsuit, and it is expected to last about two weeks. If he wins, and the judge sees that the deal was a legal transaction, Teflon Elon will be another example of the consequences he largely escapes.
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If he loses, Musk would order him to punch in his pocket to return about $ 2 billion that Tesla took out for SolarCity. Moreover, his reputation as a technological Titan who almost always gets his way would be successful. Musk’s $ 177 billion net worth is largely made up of a stake in Tesla and SpaceX its Rocket company; has few liquid assets.
“Chancery procedures are pretty cut and dry,” said Charles Elson, a professor of corporate governance at the University of Delaware. “There are very few theaters you can expect in a high-profile test, if ever, in Chancery. No one wants to miss a fiduciary case, and being able to judge this case tells you that someone thinks there’s something there.”
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In June 2016, Musk was a major shareholder in both companies and when he left Wall Street stunned, he later announced that Tesla would acquire SolarCity in an agreement he later called “headless”. SolarCity seems to be Musk’s cousins, Lyndon Rive and Peter Rive Five years later, Tesla is known for selling electric cars, SolarCity no longer exists and Rives no longer operates there Tesla’s solar division is part of what is known as Tesla Energy. Tesla installs the usual flat solar panels. Incorporated in solar roofs called Solar Roof, which has had high installation and labor costs for solar cells that include solar cells.
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Musk has already crossed swords with Randy Baron, a San Diego-based investor attorney, in pre-trial depositions. Musk despised the Baron for suggesting a purchase to a Rescue that had many conflicts.
“Was the rescue of SolarCity good for the world you’re saying?” Baron asked in a deposit.
“Advancing the sun is absolutely good for the world,” Musk said. “Do you only think about money? What is your intention in life?”
The purpose of the Baron trial is to convince Judge Joseph Slights III that Musk used his influence and popularity to persuade Tesla executives to accept the purchase and manipulate a majority of shareholders to vote in favor of it. This is the so-called shareholder-derived action, where the shareholders act to protect the company. If the lawsuit is successful, the proceeding goes to Tesla, not to the shareholders who filed the lawsuit.
Delaware is the corporate headquarters of more than half of U.S. public companies and more than 60% of Fortune 500 companies. The Chancery Court is the U.S. headquarters for resolving high-dollar business disputes. The court does not hear jury cases, and judges cannot award punitive damages. Delaware officials closed more than a year of preliminary hearings and trials in response to the Covid-19 Pandemic. Musk’s case is one of the first to be heard live since it reopened.
Musk is no stranger to litigation. In December 2019, Vernon Unsworth, a speleologist who played a role in the Rescue of a landed Thai football team, ruled out the reversal of the notorious defamation lawsuit in Los Angeles. As CEO of SpaceX, Musk sued the Air Force for the right to compete for marketing contracts and won. The SEC sued Musk for his “private” tweet from 2018, and took him to court in 2019 for violating the deal.
In addition to Musk, Kimla Musk, Ira Ehrenpreis, Antonio Gracias and Robyn Denholm, board members of Tesla, will be called as witnesses, along with several bank employees who worked on the deal. Lyndon Rive and Peter Rive are also scheduled to testify.
Larry Hamermesh, a law professor at the University of Pennsylvania who specializes in corporate law in Delaware, says the case will allow Musk to decide what level he would have before the Tesla board, if any, to acquire SolarCity.
Hamermesh said, “If the directors look at him, then Musk will have to show that the deal for Tesla’s investors was completely fair.” This means that he will have to show that it was a fair price and that the acceptance process is fair. That’s a high level. “
This story was published without a change in text from a wireless agency feed.