Elon Musk, is now faced with a new scrutiny over corporate leadership of Tesla. Musk, the world’s second-richest person is attending the long-delayed trial over Tesla Inc.’s controversial $2 billion acquisition of SolarCity in Delaware, news reports said.
Tesla shareholders are accusing Musk of misusing his power to rescue his own investment in SolarCity.
Musk is expected in court on Monday (July 12). If he loses, he would have to pay upwards of $2 billion. His net worth of $177 billion is largely made up of his stakes in Tesla and SpaceX-his rocket firm. He has few liquid assets, according to news reports.
SolarCity Corporation, headquartered in California, is in the business of solar energy generation systems and other related products to residential, commercial and industrial consumers. Tesla acquired SolarCity in 2016, at a cost of approximately $2.6 billion and reorganized its solar business into Tesla energy.
Shareholders allege that Musk used his control of Tesla to force the company in 2016 to rescue SolarCity, saving the solar panel maker - and Musk's investment in the company - from bankruptcy, according to Reuters.
The union pension funds and asset managers leading the case want Musk to repay to Tesla the cost of the $2.6 billion deal and to disgorge the profits on his SolarCity stock. If they win, it would be one of the largest judgments against an individual, the report said.