Twitter’s parent company sued a top corporate law firm on Friday over what it said were unfair payments related to Elon Musk’s $44 billion takeover of the social media company last year.
A $90 million payment made by Twitter to Wachtell, Lipton, Rosen & Katz, a leading mergers and acquisitions firm, amounts to “unjust enrichment” and must be repaid, according to casefiled by the parent company, X Corp., in San Francisco Superior Court.
The lawsuit said Wachtell Lipton took “funds from the company’s cash register while the keys were being given” to Mr. Musk, who owns X Corp.
Twitter’s previous management hired Wachtell Lipton after Mr. Musk terminated his agreement to acquire the company last year. He was unsuccessful, and the purchase closed in October.
Wachtell Lipton and a Twitter spokeswoman did not respond to requests for comment.
Twitter disputes other charges related to the purchase of Mr. Musk of the company. An advisory firm, Innisfree M&A, sued Twitter for $1.9 million in February over what it said were unpaid bills. Joele Frank, a public relations firm, sued Twitter in May, arguing that it was not paid about $830,498 for services provided in the deal.
Wachtell Lipton is one of Wall Street’s most prominent law firms, having advised on high-profile deals including Mr. Musk to take Tesla, his electric car company, private in 2018. law firms with highest income each partner.
The company was previously sued. In 2018, activist investor Carl Icahn sued Wachtell Lipton over its work on his hostile 2012 takeover attempt of CVR Energy. The suit was dismissed.
According to documents filed with the lawsuit on Friday, Twitter’s board and executives approved the $90 million payment because Wachtell Lipton and one of its lawyers, William Savitt, succeeded in making Mr. Musk followed through on his agreement to buy the company.
By approving the payment, Twitter’s former executives and board breached their fiduciary duty, the lawsuit said. Twitter’s board rushed to close the deal with Mr. Musk and did not act “carefully” or “on an informed basis,” the lawsuit says.
Wachtell Lipton received the bulk of the $90 million payment just 10 minutes before the deal closed in October, the lawsuit said. Within minutes of Wachtell Lipton receiving that transfer, Mr. Musk is several of Twitter’s top executives, including its chief legal officer and general counsel, according to the suit.
Yiwen Lu contributed reporting.
