Twitter sues Elon Musk

Twitter on Tuesday made good on its threat to sue Elon Musk for trying to back out of his $44 billion takeover. What to know: The case will be heard in Delaware Chancery Court, a venue that specializes in corporate disputes and which previously has heard cases in which acquirers seek to renege on signed agreements. Some key allegations from the complaint: "Rather than bear the cost of the market downturn, as the merger agreement requires, Musk wants to shift it to Twitter’s stockholders." "Since signing the merger agreement, Musk has repeatedly disparaged Twitter and the deal, creating business risk for Twitter and downward pressure on its share price."

"Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away." "Twitter also negotiated for itself a right to hire and fire employees at all levels, including executives, without having to seek Musk’s consent." What happens next: Twitter is asking the court for an expedited trial in September, so that the two parties don't bump into the drop-dead closing date of Oct. 24. Expect Musk to file a legal response to Twitter in the meantime, and possibly to counter-sue. Outcome: There are several ways this could play out: Chancery Court finds for Twitter, and forces Musk to complete his purchase at the existing terms and conditions. Chancery Court finds for Musk and lets him walk. The two sides reach an out-of-court settlement that may or may not result in Musk owning Twitter (i.e., Musk pays a large breakup fee or Twitter agrees to sell for a lower price than $54.20 per share).