Once again Twitter’s wealthy owner, Elon Musk, is under fire for allegedly stiffing his creditors.
Twitter’s trio of former top managers, who were given the sack personally by the polarizing tycoon last October, are now taking the centibillionaire’s company to court to recover more than $1 million in legal fees they are owed in connection with their role as former corporate officers.
It’s just the latest example of Musk unilaterally deciding he doesn’t need to pay creditors even as he continues to squeeze Twitter users for every last dollar to prop up the ailing company.
Not only has he attempted to avoid paying severance, he has also not paid his bills for the use of a corporate jet and may have illegally fired a janitor service.
Ex-CEO Parag Agrawal, chief legal officer Vijay Gadde, and head of finance Ned Segal are now suing Twitter—and in effect Musk as its owner—for reimbursement of expenses they incurred as a result of representing the company in two separate court cases.
The three are named as defendants in Baker v. Twitter, a lawsuit alleging the company hid data security vulnerabilities from investors that were later revealed by whistleblower Peiter “Mudge” Zatko, while Gadde is additionally party to the case D’Ambly v. Exoo, involving the online harassment of a reporter.
In addition, more costs ensued from inquiries by the Securities and Exchange Commission, the Department of Justice, and the House Committee on Oversight and Reform reaching as far back as July 2022.
The trio had all signed so-called Director & Officer (D&O) indemnification agreements that protect them personally from legal liability so long as they act in good faith as executives of the company. Under Delaware state law, they demand Twitter finally honor its contractual obligations.
They seek an expedited ruling requiring Twitter to comply with its obligations after several attempts by law firm Sidley Austin to secure the money from Jan. 13 onward proved fruitless.
Flying a jet with an engine out and controls that don’t function
Musk has struggled to save the company from bankruptcy after saddling Twitter with roughly $13 billion in debt he added from his leveraged buyout of the social media platform.
The new owner notably described running Twitter in December as akin to flying a “jet that is heading towards the earth at great speed, with the engines on fire, and the controls don’t function.”
Sensing he miscalculated with his ill-timed $44 billion bid made just before the bottom fell out under tech stocks, Tesla CEO had initially attempted to walk away from his unsolicited April 2022 tender offer last summer.
The board under then-chairman Bret Taylor demanded he hold up his end of the bargain and sued before the Delaware court of chancery.
Its top judge, Chancellor Kathaleen McCormick, then held Musk’s feet to the fire long enough that he had little choice but to pay stockholders in October the $54.20 per share he owed them.
Musk’s X Corp. Has since moved Twitter’s legal jurisdiction from Delaware to the state of Nevada.
Musk, who fancies himself somewhat of a jokester and briefly renamed his account “Harry Bōlz” over the Easter weekend, had not responded to the lawsuit as of Tuesday morning.
Instead, he accused publishing platform Substack of “massive theft of Twitter data” to help it launch what he described as a Twitter clone.
Twitter’s legal counsel, Michael Blanchard of Morgan, Lewis & Bockius, could not be reached by Coins2Day for comment.
