Twitter’s parent company, X Corp., has filed a lawsuit against Wachtell, Lipton, Rosen & Katz, a prominent corporate law firm, alleging unjust payments in connection with Elon Musk’s $44 billion acquisition of the social media giant in the previous year. According to the lawsuit filed in San Francisco Superior Court, Twitter claims that a $90 million payment made to Wachtell Lipton constitutes “unjust enrichment” and should be returned. The lawsuit further accuses Wachtell Lipton of taking funds from Twitter’s coffers during the acquisition process. Wachtell Lipton was hired by Twitter’s previous management after Elon Musk attempted to terminate the acquisition agreement. Despite Musk’s unsuccessful attempt, the purchase was successfully completed in October.
Neither Wachtell Lipton nor a Twitter spokesperson has responded to requests for comment regarding the lawsuit.
This is not the first dispute regarding fees related to Musk’s acquisition of Twitter. In February, Innisfree M&A, an advisory firm, sued Twitter for $1.9 million, claiming unpaid bills. Additionally, in May, public relations firm Joele Frank filed a lawsuit against Twitter, stating that it had not received payment of around $830,498 for services rendered in the deal.
Wachtell Lipton is a renowned law firm on Wall Street and has been involved in high-profile deals, including Musk’s failed attempt to take Tesla private in 2018. The firm is known for commanding high fees, solidifying its position as one of the most profitable law firms per partner.
Although the firm has faced lawsuits in the past, such as Carl Icahn’s lawsuit in 2018 related to its work on his hostile takeover bid for CVR Energy, the case was dismissed.
Documents submitted with the recent lawsuit indicate that Twitter’s board and executives approved the $90 million payment to Wachtell Lipton as a result of the firm’s successful efforts in ensuring Musk’s compliance with the acquisition agreement.
The lawsuit argues that by approving the payment, Twitter’s former executives and board members breached their fiduciary duty. It contends that the board rushed to close the deal with Musk without acting prudently or on an informed basis.
According to the lawsuit, Wachtell Lipton received the majority of the $90 million fee just 10 minutes before the deal’s closure in October. Shortly after receiving the payment, Musk fired several top executives at Twitter, including the chief legal officer and general counsel.
Contributor Yiwen Lu provided reporting for this article.
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