The wheels of justice turn slowly until you add in the coronavirus epidemic, then they grind to a halt as they did when the $2.2 billion court case involving Tesla CEO Elon Musk was put on hold due to the outbreak. A new trial date has not be set.
Shareholder groups led by union pension funds and asset manager filed suit against Musk, claiming Tesla’s 2016 $2.2 billion purchase of SolarCity was done solely to benefit him and done at the expense of Tesla and its shareholders.
Musk, conversely, claims the deal was beneficial to both Tesla and SolarCity. If he’s wrong, it could cost him as much as $1 billion. The case is being heard in in Delaware’s Court of Chancery.
In the suit, shareholders argue SolarCity, which produces and installs rooftop solar energy panels, was secretly on the brink of bankruptcy when Tesla purchased it, according to Reuters. Further they claim the deal benefited Musk, who is SolarCity’s largest shareholder, his cousins who co-founded the firm, and Tesla directors who owned stakes in SolarCity.
Investors are asking that Musk be forced to give up the 2.2 million shares of Tesla he received in the deal, which on Thursday were worth about $1.2 billion.
Naturally, Musk points out that Tesla’s stock has tripled since the deal, demonstrating its value. SolarCity has withered because its staff were redirected toward launching the Model 3 sedan, a make-or-break product for Tesla, not because the solar business lacked value, according to Musk.
Tesla directors who approved the deal settled allegations against themselves in January for $60 million, which was paid from insurance. They denied wrongdoing, Reuters reported. Musk faces the potential loss of as much as $1.2 billion, based on the value of the shares he got for the purchase, Reuters noted.
Musk faces the potential loss of as much as $1.2 billion, based on the value of the shares he got for the purchase, Reuters noted. However, Musk is no stranger to time in court, most recently dealing with a lawsuit related to his fight with a British diver who helped rescue members of a youth soccer team caught in a flooded Thai cave last year.
The two got into a spat over efforts to rescue the members of that team and their coach but things escalated when the South African-born Tesla CEO claimed 64-year-old Unsworth had married a 12-year-old and then described him as a “pedo guy,” a slang term for pedophile.
The spat between Musk and Unsworth began in July 2018 when rescue efforts got underway to extract 12 teens and their coach from a flooded Thai cave. Unsworth, an experienced cave diver, was lending support to an international team on the scene.
Just prior to that, Musk wrestled with the U.S. Securities and Exchange Commission, which forced him to relinquish his position as Tesla chairman last year after falsely indicating the carmaker had lined up funding to take itself private.