The judge overseeing Twitter Inc’s (TWTR.N) $44 billion lawsuit against Elon Musk has a no-nonsense reputation as well as the distinction of being one of the few jurists who has ever ordered a reluctant buyer to close a U.S. corporate merger.
Kathaleen McCormick took over the role of chancellor or chief judge of the Court of Chancery last year, the first woman in that role. On Wednesday, she was assigned the Twitter lawsuit which seeks to force Musk to complete his deal for the social media platform, which promises to be one of the biggest legal showdowns in years.
McCormick on Friday scheduled the first hearing for July 19 in Wilmington, when she will consider Twitter’s request to expedite the case and conduct a four-day trial in September.
Shares of Twitter were up about 2% to $37.11 in midday trading on Friday, but still more than 30% below the deal price.
Judges have ordered reluctant buyers to close corporate acquisitions only a handful of times, according to legal experts and court records. One of those was McCormick.
Last year, McCormick got the attention of Wall Street dealmakers by ordering an affiliate of private equity firm Kohlberg & Co LLC to close its $550 million purchase of DecoPac Holding Inc, which makes cake decorating products.
She described her ruling as “chalking up a victory for deal certainty” and rejected Kohlberg’s arguments that it could walk away because of a lack of financing.
The case has many parallels to the Twitter deal. Like Musk, Kohlberg said it was walking away because DecoPac violated the merger agreement. Like Musk, Kohlberg argued in part that DecoPac failed to maintain ordinary operations.
There are also differences. Musk’s deal is magnitudes bigger, involves a publicly traded target company in Twitter and might have implications for Tesla Inc , the electric vehicle maker that is the source of much of Musk’s fortune.
Tesla shares were trading up slightly on Friday at $718.04, down from around $1,000 when the Twitter deal was announced.
In other cases, she has come down on the side of shareholders when they clashed with management.
Last year, she prevented energy company The Williams Cos Inc from adopting a so-called poison pill anti-takeover measure, saying it breached their fiduciary duty to shareholders.
Last month, she said shareholders of Carvana Co (CVNA.N) could sue the board for a direct offering of stock to select investors when the share price was depressed during the early pandemic.
A graduate of Notre Dame Law School, McCormick started her career with the Delaware branch of the Legal Aid Society, which helps low-income people navigate the court system.
She went into private practice “mainly for financial reasons,” she told the Delaware Senate during her confirmation hearing, joining Young Conaway Stargatt & Taylor, one of the state’s main firms for business litigation.
She joined the Court of Chancery in 2018 as a vice chancellor and became the first woman to lead the Court of Chancery last year.
Despite her mild manner, Eric Talley, who specializes in corporate law at Columbia Law School, said he doubts McCormick would be cowed by Musk.
“I would not be placing my bets on Chancellor McCormick suddenly becoming weak-kneed,” he said.
