[stingraycharles]

I actually have experience with this type of stuff, some business tried to acquire mine and kept postponing, and ended up with some excuse that there wasn’t enough technical design documentation, which would be a real-breaker. It wasn’t super big money, but also not small (high 6-figures).

I ended up suing them, won on all counts, and the deal had to go through.

Unfortunately, this company simply refused to do that even after the judge ruled against them, and I had to renegotiate the terms set by the judge.

That was one hell of a ride.

Point being, if Musk really doesn’t want it, even if Twitter wins a lawsuit, Musk will probably find another way to postpone or renegotiate or whatever. In the meantime, Twitter is not in a good shape, and this whole thing is probably hurting them so much more than that they could possibly benefit from.

[t_mann]

Sounds like a very unpleasant experience, sorry to hear. But I'm not sure it's a good precedent for this case, for two reasons:

a) You were happy to settle, which sounds understandable. But when the stakes are $44bn and most actors on Twitter's side are but agents for Twitter shareholders, their chief concern will be not breaking their fiduciary duties if they accept anything less than the maximum amount they could get. It's a bit hard to imagine how the legal bills for seeing this through could stack up to even .1% of the purchase price ($440m), and that's nowhere close to the discount that Musk will be looking for (with good reason imho, btw).

b) In your case the other party might have gotten away with dodging a court order to pay (or at least made it appear like that). That's pretty much unfathomable if you are literally the richest man on earth and live in the US.

[Terretta]

> chief concern will be not breaking their fiduciary duties

Let’s not forget the all the blather from Twitter board and leadership how their fiduciary duty was to not sell to Musk at this price.

Cramer even claimed the board would be personally liable for accepting the deal.

https://www.cnbc.com/2022/04/14/cramer-twitters-board-has-no...

[mrtnmcc]

Cramer's advice is a decent guide if you always take the opposite opinion.

[sharker8]

The Anti Cramer portfolio is not a sufficient contrarian approach, because the Cramer portfolio also underperforms similar to a random walk. Put another way, the opposite of a random walk is another random walk.

[mrtnmcc]

Might be able to make an argument based on Regression Towards the Mean and the fact Cramer picks are "extremes".

[coliveira]

Yes, following that guy it is understandable why he would never be a hedge fund manager for a long time. When it comes to investing he is stupid as a brick.

[belter]

Hedge Fund Managers are also not the brightest flowers:

"The SP 500 Index Out-performed Hedge Funds over the Last 10 Years. And It Wasn’t Even Close": https://www.aei.org/carpe-diem/the-sp-500-index-out-performe...

"How Smart Are the Smart Guys? A Unique View from Hedge Fund Stock Holdings" [PDF]: https://jgriffin.info/wp-content/uploads/2016/10/smart.pdf

"...Hedge funds exhibit no ability to time sectors or pick better stock styles. Surprisingly, we find only weak evidence of differential ability between hedge funds. Overall, our study raises serious questions about the perceived superior skill of hedge fund managers..."

[seanp2k2]

The hedge funds themselves get rich through fees. The investors get robbed. Not sure why anyone still believes in hedge funds.

[bush-bby]

But that’s not the benefit of putting your money in a hedge fund at all, the benefit is hedging against losses, so that you don’t have to worry about losing money when everyone else is.

[MrMan]

he was a really good hedge fund manager though

[tyrfing]

> Let’s not forget the all the blather from Twitter board and leadership how their fiduciary duty was to not sell to Musk at this price.

Is there a source for this? I certainly didn't see it. They considered rejecting the offer, and quickly passed a poison pill provision, but that was about preventing buying the company on the open market instead of making a deal like this. The offer was initially only a very short note, and Twitter decided to sell within 3 days of financing being lined up.

https://www.sec.gov/Archives/edgar/data/0001418091/000119312...

[Hendrikto]

> It's a bit hard to imagine how the legal bills for seeing this through could stack up to even .1% of the purchase price ($440m)

That is 1%, not .1%

[t_mann]

You're right, my bad.

[londons_explore]

> dodging a court order to pay

I'm pretty surprised musk seems to have put himself personally on the line, rather than putting 'musk acquisition project llc' as the party making the offer.

If it was the latter, then everything could be arranged so there was no money in that company to pay for any lawsuits. As the worlds richest man, dividing up your liability like that into many LLC's would seem like a very important thing to do.

[dragonwriter]

> As the worlds richest man, dividing up your liability like that into many LLC's would seem like a very important thing to do

Unfortunately for Musk, when an LLC is used as a proxy for the single member without real separation, the LL part stops working as anything but (on a matter this size) a small additional speedbump rather than a shield, at the same time, it's even nominal separation makes it harder to make deals than if your hoards of assets were behind them.

[watwut]

> In your case the other party might have gotten away with dodging a court order to pay (or at least made it appear like that). That's pretty much unfathomable if you are literally the richest man on earth and live in the US.

It is other way around. It is way easier for rich person to get away from dodging courts then poor one. Just the fact that rich person can pay fights and layers longer, and fact that rich has it easier to retaliate so everyone is more careful not to step on their toes or do mistake.

[giansegato]

How could they refuse after being compelled by a court ruling? Did they appeal / sue you back? Can't see how they could simply say... "no".

[stingraycharles]

The judge ruled that the payment had to be made immediately; they could sue back, but they would have to pay first. In their words, it was a “BS ruling”, and they simply didn’t pay.

I’ll tell you that I didn’t know you could just say “no”, but they did. My lawyers were at the point that they would send a (legally backed) letter to all their customers, that their payments should be redirected to some court. It would have caused a massive hellfire, though.

I had the choice of going through with all this, but the outcome would still be uncertain, legal fees would increase, and take a long time regardless. It was a fully bootstrapped business, I was relatively young and in debt, and I decided to renegotiate.

In the end I got the money I needed to pay off my debts, legal fees + then some, a huge learning experience, and took a 1 year sabbatical. I just wanted this whole thing to be over.

[doikor]

Seems like a really complex system to get your money. Here in Finland you would just start bankruptcy procedures by filing a claim in the court and with the court order saying they owe you it would go through in a day or two giving the other party 2 weeks time to pay or the court would take over all their assets and get you your money (and sell those assets if they don’t have it in cash)

A single verified unpaid bill is grounds for starting the bankruptcy procedure here so it is actually good tool to force big companies to pay. Though you can say goodbye to any future business relations with them if you do that.

[mattbee]

It's the same in the UK:

https://www.gov.uk/wind-up-a-company-that-owes-you-money

"To wind up a company you must:

* be owed £750 or more * be able to prove that the company cannot pay you "

That's it.

[tuukkah]

How do you prove they cannot pay you - show an unpaid invoice?

[mattbee]

I only ever threatened it once so didn't go to the expense of filing.

In practice, yes an unpaid invoice, plus proof of delivery /service. Alternatively, a judgment from a court ordering them to pay.

[Iv]

Japan is similar. I keep marveling at the stories about the US system and wonder how it is supposed to be considered friendly for businesses...

[xwdv]

Does the example not make it obvious? Imagine your business doesn’t want to pay a bill from some douchebag business you hate.

[Archelaos]

I think the parent means that a system in which anyone can delay the payment of otherwise legitimate financial claims through an extremely protracted legal process is generally not very business-friendly. Of course, it is friendly to businesses that do not want to pay their liabilities, but on the cost of all the others. What good is a legal system if a company cannot enforce its rights in practice?

[simonh]

It’s not a case of a simple disagreement though. In this situation there’s a court order requiring you to pay the bill. Not wanting to doesn’t cut it.

[bjornsing]

In Sweden you can actually do that before you’ve won the court case. If a lower court rules that you have a legal right to payment, then you can collect on that even if the other party appeals to a higher court. (They can then of course do the same to you if they win the appeal.)

But this is taking it a bit far IMHO. It’s confusing to me at least that a court order is not final (“has not yet won legal power” as we say in Sweden), but can still be used to force payment through the authorities (Kronofogdemyndigheten).

[lazide]

Getting though it however, and actually getting paid is a long and arduous process. That’s what the poster was up against.

It’s not THAT uncommon for some folks to just say ‘oh yeah, make me’, and while there are (usually) methods of doing it without their co-operation, it’s never easy.

[doikor]

If you are the only debtor and they have the money (no need to sell anything) then it is actually really fast. The court just takes over the bank accounts and sends you the money.

The real slowness of the process kicks in when there are multiple parties claiming their money and there isn’t enough assets to pay everyone.

[lazide]

By ‘really fast’, I’d wager 6 months to a year, no?

You’d have to show all that was the case for instance, which if they ignored you and generally were unco-operative would take awhile.

[Forgeties79]

Stories like this remind me why I hate seeing advice on forums that often boil down to…”and if that doesn’t work, just sue them.“ It’s a massive, risky, expensive, physically and emotionally draining experience.

[afrcnc]

So, basically, if you rich enough in the US, you can simply ignore the courts?

[harambae]

At least for a long time, yes. The example that comes to mind...

https://www.washingtonpost.com/technology/2020/01/08/califor...

[paulcole]

Yes and it doesn’t have to do with rich/poor. Until someone either takes an action on your behalf or physically forces you to take an action you can ignore their requests all you want.

[csomar]

> I had the choice of going through with all this, but the outcome would still be uncertain, legal fees would increase, and take a long time regardless.

So it’s just you deciding not to go with this… for some reason.

I’m pretty sure if you enforced the ruling, you’d have gotten a quick response from them. It might seem like a dick move but they moved first.

At $44bn, I highly doubt the dudes of Twitter will take the same stance you took.

[naikrovek]

> I’m pretty sure if you enforced the ruling, you’d have gotten a quick response from them.

don't tell someone that you know more about a situation that they were in and you were not. A) it's freaking rude as hell, and B) you absolutely DO NOT have more awareness about this situation than the person who lived it.

[stingraycharles]

Thank you for saying this. While I do agree with the parent that in the the end it was my decision to go this route, the situation was much more complicated, and I absolutely wouldn’t get a quick response from them.

Having said that, I wasn’t insulted by the parent, and they made a good point: my decision was based on pragmatism, and in the case of Twitter, this was much less likely to be the case. Since I decided to share my story in light of this whole Twitter debacle, the parent was right to point out that the comparison isn’t entirely correct, even more so when it’s about dozens of billions. The rules of the games are different there.

[multjoy]

Commercial litigation is entirely about pragmatism.

If twitter won and was in the position to compel performance, is that even in the best interest of the company? To force it upon an unwilling owner would be the best way to destroy it in very short order as they desperately attempt to recoup their costs.

Far more sensible, with an enforceable order in hand, to come up with a negotiated settlement. Far easier, as well, with a nuclear option.

[armada651]

I don't get this mentality. I don't get why people think living through an experience makes them such an expert that any outside opinion is immediately offensive.

An outsider can always offer a new perspective and they could be more knowledgeable than the person who went through the experience.

[Applejinx]

It's a Chesterton's Fence situation.

An outsider is just as likely to be an arrogant fool, and an arrogant fool is more likely to find skepticism offensive than a normal person. There are plenty of people, even on Hacker News, who assume that they are by default more knowledgeable than anybody else, and therefore are obliged to look at any given situation, opine, and set the record straight. Other people don't matter, and certainly their 'experiences' won't count. So, it's not surprising or offensive to run into the 'water squirt bottle of correction', where kitty gets unexpectedly hit with the message 'opining on experience you've never experienced disqualifies you as a first class advice giver'.

Chesterton's Fence is of course the idea that, if you encounter a fence and you don't know what it's for, you don't take it down until you do know what the fence was for. People tend to get worked up about the things they see that, to them, seem to be there for no reason, and advocate all the more vigorously for removing such things when to them, the existence of the thing is obvious nonsense with no possible justification… they would rather think that a thing was done by a total fool who's so inferior to them as to be hopelessly incapable, than consider the idea that their superiority might be questionable.

[WastingMyTime89]

It’s not offensive. It just makes the replier looks like an idiot.

Who do you think had the best perspective on the situation? The person who went through the litigation, had lawyers, knew all the details of the case and made the decision of the poster sending a canned five lines reply based on a paragraph?

It does take much awareness to realise that sending an abrasive reply when you are in no position to do so might be ill received by the community (well at least the quickly diminishing part who wants to have an interesting discussion).

[stingraycharles]

It wasn’t my intention to claim to be an expert on the situation, as much as it was mostly to share a story and point out that there’s a large grey area here.

The parent definitely was factual and correct, but the tone made it sound a bit as if they thought my reasons for doing so were incorrect. That would be a bit of a stretch, and I think that’s what was bothering @naikrovek

[fenomas]

> An outsider ... could be more knowledgeable than the person who went through the experience

If the outsider is making general claims about similar sorts of situations, then sure. If they're predicting the behavior of someone unknown to them, but well known to the OP, then not so much.

[aantix]

So doctors know less about a situation than the patient experiencing the pain?

A good coach has zero impact on their players that actually experience the game?

[Kaze404]

A doctor certainly knows less about what the patient is feeling than the patient themselves. It's a known phenomenon with women's health, where we have medical professionals literally gaslighting us about our own physical and mental health.

[lazide]

I have a friend who got screwed by a major (top 5) US bank, won the court case against them, and they then refused to pay the settlement.

He went through the paperwork, and 6 months later they wrote him a cashiers check right then and there when he showed up with the Sheriff to take possession of one of their prized historic artifacts from the lobby of their corporate headquarters during business hours.

Not very many people are able and willing to deal with the shittiness of all the paperwork required, and a lot of bad actors count on that.

[Kinrany]

Should have taken the artifact. Magic items are always better

[pas]

wtf. which jurisdiction is this? so strange you can't take the final ruling and go to a collections agency and get your money :o

[Inhibit]

You can. But the story would imply that all that money is in receivables; it's hard to seize a big pile of debt, I assume even in Europe.

[pas]

not really as far as I know.

either the company pays up (in whole or in installments, etc) or the enter into bankruptcy proceedings and the courts appoint someone. if the company is profitable, then as above it'll eventually pay up, if not, then it'll be sold off and the liabilities will be covered up to by the income of the sale.

[v0x]

You can. In my very very limited experience you can sell it to collections for something like 80% of the value in a case where they have a perfected security interest. They will send a UCC letter to payors, who are legally obligated (from what my attorney tells me) to pay the creditor, absent some proof that they don't need to.

[joshspankit]

Do some thought experiments in your head, and you can see how quickly things break down.

Like: The courts say pay, and the company says no. So you...

- ...send police (not really the jurisdiction of the police, but let’s pretend they go). The police show up and say “Give us the money you owe” and the business says no. Now what? They can’t go on to private property without permission or warrant. Dead end.

- ... become your own collections company. You call them as much as you are legally allowed, and ask them for the money. Each time they say no. You call their family (you might not be allowed to do this) and they say “not my problem” so they are dead ends. You call their vendors and clients but all you are doing is informing them that company X owes you money. They don’t have any obligation to give you that money.

- ... sell the debt to a collections company. That company gives you pennies on the dollar (20% if you’re lucky).

- ... work through the courts to garnish wages. You have no idea what this company pays their staff for wages, nor who to target (the exec who said no?), but you push forward anyway and end up getting that garnishment. You now get 30% of everything that person makes. Let’s call that 30k/yr at the time of the garnishment. Then, that person quits or takes a “lower-paying job” and you’re down to 10k/yr. It will take decades to get what’s owed to you and in the mean time this person is actively battling you in court because they hate losing 30% of what they make every month.

- ... pursue action that gives you a percentage of the company’s net revenue. If you get it, you can only celebrate for what feels like a moment because they could have a “sudden increase in expenses” or choose to close the business and start a new one with a different name. You can try to get the agreement shifted to that new company, but that’s a whole new challenge and the whole time the founders are saying “No.” “Not our responsibility.” and so on.

It’s really very hard to get cash in hand from anyone, whether there is a court ruling or not.

[pas]

it's not that hard here (Hungary)

yes using a collections company is the fastest way, but here the cost is less than 10%.

and it's not that hard in case of mortgage defaults in the US either (foreclosure is completely routine). oh and there was a story of a dude who won some claims against some bank, the branch was either clueless or forgot to pay, so eventually the dude went to the branch office and packed up some of their furniture. (which is of course less routine)

the way it works here is that if the company doesn't pay upon the court order they automatically enter into bankruptcy and the court appoints someone to manage the company during. so they can't just suddenly "increase expenses"

[bryanrasmussen]

I'm betting that for the money Musk is in for they will go with that option though, and considering all the side effects that would probably happen if Musk just said 'No' - he would have to be a level of stubborn that borders on mental instability.

[carom]

When you have a judgement you can send it to collections, but often people just don't pay these things. It's really hard to collect for even small things like evictions.

[dctoedt]

> send it to collections

When my now-adult son was in high school, he had a summer job working as a moving man for a friend's dad's company. The company had a contract with the local constable's office. One of my son's and his friend's assignments was to drive a truck around to the offices of a very-big shopping mall and to meet a constable to collect a seven-figure court judgment that hadn't been paid. The constable, my son, and his friend walked into the management office; the constable presented the writ of execution of the judgment, and my son and his friend started unplugging and loading up office equipment and furniture to be hauled off and sold at auction. The manager said "Wait, wait"; a hour later, a cashier's check arrived for the amount of the judgment.

[no-s]

> The constable, my son, and his friend walked into the management office; the constable presented the writ of execution of the judgment, and my son and his friend started unplugging and loading up office equipment and furniture to be hauled off and sold at auction.

yeah, that’s like totally reasonable. I’ve done similar back in the ‘80s, using a similar process seized bank accounts when the former employer ignored an order to pay a judgement over unpaid expenses. Notably they didn’t bother to appear in court in the first place; they never responded to service even though I paid extra to have the Sheriff’s Deputy serve it. Then they ignored my calls and letters for several weeks. I knew all the bank account numbers already, so: back to the judge for an order to seize the accounts. Showed up at the bank an hour later with the deputy in tow and walked out with a bank check for roughly $45k 30 minutes later.

Nowadays a bank makes you wait some days for a payout but they will freeze the funds immediately.

These days I prefer lawyering up, but in the late ‘70s I called on a supplier to deliver promised equipment that was being delayed because well, I was a teen-ager and even though I had paid they felt like I wasn’t a serious customer. So I paid a local motorcycle club $500 to escort me to the meeting, as well as sit there in the parking lot revving engines and scratching off whilst I met with the vendor. The MC got a hefty tip because: members helped load the product, and the MC president encouraged a 50% refund made out to me personally to ensure I would never have to be a customer again...

[BellLabradors]

Video of a similar story:

https://youtu.be/3ctLEGrOmf4

[encryptluks2]

You can also get an order to liquidate and literally start taking assets like real estate, bank accounts, etc.

[verve_rat]

Not to mention, could the officers of the company be held in contempt of court?

[encryptluks2]

It is possible, but typically the remedy is a writ of garnishment.

[pmorici]

If a party is intent on being a bad actor it is extremely difficult to enforce judgments where the sum is too small to warrant extraordinary effort.

[martin8412]

Difference being, Twitter has deep pockets and are highly motivated to see this through.

[neilwilson]

Not as deep as Elon Musk.

When it comes to court battles, relative depth matters.

[Ekaros]

Only to certain point. At that point you can't spend more than other party. There is only so much legal work that can be done for one case.

Not that bar isn't very high, we are possibly talking about millions or tens of millions in billings, but either side have that and it will make sense for both to spend it in every case.

[volkl48]

It really doesn't here IMO. They can both afford top-tier legal teams.

Delaware courts are known for dealing with these sorts of cases rapidly - there isn't likely to be any opportunity for dragging it out for years.

[blueboo]

Is it clear that Elon is more liquid than Twitter? Twitter has several billion in cash. Musk is reported to have only 3b cash. Tesla and SpaceX may need his capital to survive the downturn. They both have an arsenal of options to raise further cash.

I realise Elon is a bigger fish but he is a highly leveraged and constrained one…if anyone has more insight into this dynamic I’d interested to hear it

[achow]

Twitter cash on hand for the quarter ending March 31, 2022 was $6B

https://www.macrotrends.net/stocks/charts/TWTR/twitter/cash-...

[bsaul]

How is twitter getting so much cash ? Are the ads on twitter earning them that much ?? Or is it cash they got from raising funds ?

[HWR_14]

You can see Elon sold something like $8-$12 billion in TSLA stock in the past few months. Assuming it didn't get spent on SpaceX or somewhere else (it was supposed to be used for the Twitter buyout) he has more cash than Twitter. But that doesn't really matter, at a certain point the amount they spend in legal services will reach such diminishing returns that it's not worth it.

[baxtr]

Re twitter: What a waste of life time and resources that could be otherwise have been used. All for what? For the ego of a madman?

[synu]

What happened when they ignore dthe order from the judge? Nothing?

[nabla9]

If he willfully disobeyed, there will be sequestration order against his assets.

The court will appoint someone else to go trough his assets and find a way to pay. Selling Tesla stocks for example.

[throwaway_2341]

< Twitter is not in a good shape

It appears they will make around $6B in annual revenues, I think their financial performance is better than most social media platforms, save FB. In what way, Twitter is not in good shape?

[trident5000]

The CEO has a massive parachute. Its in his best interest to just settle on a lower price rather than get tied up in courts for years with Musk. If the markets continue to decline, a lower offer is going to look more and more attractive to shareholders. Just my 2 cents.

[rvnx]

Why would you force someone to buy something they don't want, whatever the reason is ? If they decided not to proceed to the deal it means it was a bad deal from their perspective or that it would put them in a worse situation. Essentially you are taking advantage of them by forcing them. It's like if you sell a very expensive "brown ice cream", the buyer tells you he wants to buy it, and then when the buyer has it in hands they realize it's not chocolate and you say: "but it's brown ice cream, you are forced to buy it now"

[krisoft]

From the seller’s perspective? Because they own a thing which is worth less to them than the buyer promised for it. Therefore they can profit greatly from the deal.

This is not the story of some happless kid swindled by a brown ice cream vendor. This is a sophisticated business person who has, prior to signing a legally enforceable contract to buy the brown icecream as-is, talked publicly about how the ice cream is just brown and not chocolate.

Why did the buyer made that contract to be written and then signed it? The potential buyer of the brown ice cream was not taken seriously initially. Everyone, including the seller, assumed that he is going to flake out and not go through with the transaction. The buyer has seen that he is not taken seriously, but he really really wanted to own the brown ice cream at that time. So the two parties willingly went into a written agreement that the buyer is going to pay a lot of money for the brown ice cream. Since the seller had concerns about the flakyness of the buyer, they both instructed their lawyers to write the contract as ironclad as possible. And what gives teeth to contracts like that, is that they can be enforced through the court system.

[xmodem]

Well, this probably doesn't come up very often in general, but one reason for Twitter to want to proceed might be if someone had signed a legally binding agreement to pay 15 billion dollars more than the market rate.

[CogitoCogito]

> Why would you force someone to buy something they don't want, whatever the reason is ?

Because they agreed to buy it? And because you stand to make a lot of money. Doesn't seem that complicated to me.

[notahacker]

Yep. It's basically "why wouldn't you accept half your wages if the company really didn't want to pay you the full amount?" or "if you lend somebody something and they decide to keep it, why would you try to get it back?"

[solar-ice]

If he didn’t want to buy it, he shouldn’t have signed a contract saying they are going to buy it with a huge amount of fanfare, several lawyers, and initially against the desire of the company. He knew, well in advance, what he was buying, and he explicitly waived the right to due diligence.

[ryanbrunner]

"It turns out I don't want to do that" isn't something that should be supported in regards to written and signed contracts. Selling a company is a large enough thing that there's downstream effects when the contract is signed and both parties are committed, and there's a real cost to the counterparty saying "on second thought, nah".

[ehnto]

To get their money, presumably. If Twitter stocks fall due to this situation then all the more interest in getting the previously set deal to go through.

[tgsovlerkhgsel]

It being a bad deal for them likely makes it a very good deal for you.

Also, letting them renege on the deal they agreed to would likely put you in a worse situation than had they not offered the (bad, for them) deal in the first place, making it harder to feel bad for them.

Ultimately, if a business made a binding agreement, letting them out of it to be nice is nice, but neither required nor financially sensible.

[avereveard]

The due diligence was done already, and this being a public company adds a layer of regulation on top