Australia fined Twitter the equivalent of US$400,000 over its failure to address the proliferation of child sexual abuse material (CSAM) on its platform. Now rebranded as "X" by new owner Elon Musk, the company tried to avoid the judgment by claiming that Twitter doesn't exist anymore. An Australian judge rejected that argument, determining that the new company inherited the old one's liabilities.
Wheelahan emphasized that the Nevada merger law specifically stipulated that "all debts, liabilities, obligations and duties of the Company shall thenceforth remain with or be attached to, as the case may be, the Acquiror and may be enforced against it to the same extent as if it had incurred or contracted all such debts, liabilities, obligations, and duties." And Bogatz's testimony failed to "grapple with the significance" of this, Wheelahan said.
Overall, Wheelahan considered Bogatz's testimony on X's merger-acquired liabilities "strained," while deeming the government's US merger law expert Alexander Pyle to be "honest and ready to make appropriate concessions," even while some of his testimony was "not of assistance."
Luckily, it seemed that Wheelahan had no trouble drawing his own conclusion after analyzing Nevada's merger law.
Though the ruling here was parsed through analysis of Nevada law, it has an undeniable accent. American courts honor the various legal devices that allow companies to evade and eliminate liabilities through restructuring. Foreign courts don't feel the same obligation. QED.
Australia's online safety commissioner said that the attempt to use the merger to avoid complying with Australia's Online Safety Act was unacceptable. Julie Inman Grant: "Had X Corp's argument been accepted by the Court, it could have set the concerning precedent that a foreign company's merger with another foreign company might enable it to avoid regulatory obligations in Australia."
