is the CEO Tesla, Elon Musk, Tomorrow 12, goes to Delaware Court of Chancery to defend the purchase of SolarCity, a solar panel company, held in 2016 for $2.6 billion. If he receives an adverse punishment, the entrepreneur could end up paying more than $2 billion of his personal fortune.
The lawsuit has been filed by a group of shareholders who allege that the company’s purchase of Tesla was fraught with a conflict of interest, as Musk was the largest shareholder and chairman of SolarCity at the time. The lawsuit also alleges weak corporate governance on Tesla’s board, which has stymied the entrepreneur’s wishes and agreed to buy a struggling company.
Last year, the board members named in the lawsuit settled with Tesla shareholders for $60 million with no wrongdoing. It was only Kasturi who decided to take the fight to court.
The trial to begin tomorrow was scheduled for March last year but has been postponed due to the pandemic.
At the time of the acquisition five years ago, Musk argued that the deal would be transformative, combining the leading maker of electric vehicles with the largest installer of solar panels in the United States at the time. However, shareholders point out in action that the company was going through serious financial difficulties prior to the transaction and had no other option but to finance itself.
Founded in 2016 by Musk’s cousins Lyndon and Peter Rive, SolarCity lost $769 million and $375 million in 2015 and 2014, respectively.
The businessman’s lawyers, in turn, say that the company was solvent and could have looked for other ways to raise funds.