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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.
"She already has a track record of not putting up with some of
the worst behavior that we see in these areas when people want
to get out of deals," said Adam Badawi, a law professor who
specializes in corporate governance at the University of
California Berkeley. "She is a serious, no-nonsense judge."
In contrast to Musk's brash and volatile behavior, she is known
as soft-spoken, approachable and amiable -- but a person who
also stands her ground. She advocates respect among litigants
and integrity at legal conferences.
"We've always had each other's backs, we've always gone out for
drinks after arguments and maintained this level civility," she
told a gathering at the University of Delaware this year.
After weeks of confrontational tweets suggesting Twitter was
hiding the true number of fake accounts, Musk said on Friday he
was terminating the $54.20-per-Twitter share acquisition, worth
$44 billion. On Tuesday, the social media platform sued.
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.
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 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.
(Reporting by Tom Hals in Wilmington, Delaware and Hyun Joo Jin
in San Francisco; editing by Noeleen Walder and Jonathan Oatis)
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