It appears that Elon Musk will get to keep a highly sought-after list of individuals and entities who’ve backed his vision of a super app under wraps, as per the latest court judgment delivered just moments ago.
We noted earlier this week that, on the 06th of June, Plaintiff Sarah Anoke had filed an administrative motion in the United States District Court of the Northern District of California, seeking the disclosure of the identity of the persons who invested in Elon Musk’s X Holdings Corp.
For the benefit of those who might be unaware, Elon Musk filed for Twitter’s merger with X Corporation on the 15th of March. Interestingly, X Corp. itself has a parent company bearing the name X Holdings Corporation and registered only in March 2023 with an authorized capital of $2 million. Musk remains the president of X Corp. and X Holdings Corp. These shell companies are meant to pave the way for an “everything app” on the pattern of Tencent Holdings’ WeChat super app.
This brings us to the crux of the matter. The court had ordered Twitter to file a supplemental form to disclose the identities of X Holdings Corporation shareholders. However, in response, Twitter filed another motion, seeking authorization to file the supplemental disclosure under seal.
As per the redacted portion of Twitter’s filings, there are supposedly 95 entities/investors in X Holdings Corporation, including individuals, private families, and trusts. In some cases, X Holdings Corporation has been mandated to keep the identities of its shareholders confidential.
The judge in Anoke v. Twitter just granted Twitter’s motion to file its list of shareholders under seal. Twitter had previously argued that disclosing the shareholders “would result in injury” — raising the obvious question of who they are.https://t.co/rJtX31pc42
— Erin Woo (@erinkwoo) June 13, 2023
Judge Susan Illston wrote in today’s brief judgment:
This means that Elon Musk will not be required to publicly disclose the identity of the individuals and entities who’ve backed his X Holdings Corporation initiative.
Twitter Reveals That ‘X Holdings Corp.’ Has 95 Shareholders… That It Would Like To Keep Secret
All sorts of interesting things can happen in the process of a lawsuit. What’s going on here may seem complex, but stick with it, as it’s worth following…
You may recall that back in April, it was revealed (first in a court filing, and later in an announcement to partners) that Twitter had been merged into a new company, X Corp., a subsidiary of X Holdings Corp. At first, many people assumed that this was the same entities that were used in the original purchase agreement for Twitter, but those were actually different entities (X Holdings I and X Holdings II) which are not X Holdings Corp.
And while there has been plenty of talk about the equity holders in Twitter post-Elon, that doesn’t mean the same people were also the equity holders in X Holdings or X Corp. Indeed, there had been talk months ago that Elon was seeking additional investors in Twitter.
Anyway, that takes us to the lawsuit Anoke v. Twitter. This is related to some of the many laid off Twitter employees who have filed arbitration claims against the company for breach of contract (usually over severance payments). The lawyers for a group of such employees filed a case in California Superior Court, seeking to compel Twitter (or whichever company is on the hook) to actually pay for the arbitration claims made by the former employees. It turns out that among the many bills Twitter has been refusing to pay include the required fees to arbitrators to handle the many, many arbitration claims made by ex-employees.
Twitter’s lawyers at Morgan, Lewis removed the case from California state court to federal court. The lawyers for the laid off employees, represented locally in California by Ethan Jacobs (as well as Akiva Cohen in New York) pointed out that the local rules in California’s Northern District (where Twitter removed the case to) requires full disclosure of everyone who owns a piece of the company. Per local rule 3-15:
The Certification must also disclose any persons, associations of persons, firms, partnerships, corporations (including, but not limited to, parent corporations), or any other entities, other than the parties themselves, known by the party to have either: (i) a financial interest of any kind in the subject matter in controversy or in a party to the proceeding; or (ii) any other kind
