July 14, 2022 6:13 AM EDT

As Twitter mounts its legal case against Elon Musk to force him to commit to a takeover deal the company initially balked at, employees say the social media platform will emerge from the battle a very different company, whatever the outcome.

Twitter filed a lawsuit against Musk on Tuesday in an attempt to force the billionaire to complete his $44 billion acquisition of the company, and accusing him of “hypocrisy” after he said he wanted to back out of the deal.

“Now this whole deal is tanking, no option looks good,” says a Twitter employee who was not authorized to speak publicly. “We’re either running into a brick wall or off a cliff.”

Read More: Twitter Employees Have Spent Years Trying to Make the Platform Safer. Elon Musk Could Undermine All That

Musk, the CEO of Tesla and the world’s richest man, committed to buy Twitter in April at $54.20 per share. But since then he has repeatedly criticized the social media company, claiming that it misled him, his financiers and the public over the number of fake accounts on the platform. Twitter says fake accounts, or “bots,” make up roughly 5% of the total number of accounts on the platform, whereas Musk has alleged, without sharing evidence publicly, that the percentage is much higher.

Musk’s criticisms began after a rout in tech stocks sent Twitter’s market valuation tumbling far below what he offered for the company. Around the same time, the value of Musk’s company Tesla, which underpins the majority of his wealth, also fell after Musk announced he planned to sell some of his shares to fund the Twitter deal, meaning he now is significantly less wealthy than when he put the deal in place.

Twitter is currently trading at around $34 per share, valuing the company at $26 billion—little more than half of what Musk offered for it. Tesla’s shares were trading at more than $1,000 per share in April when Musk announced his intention to buy Twitter, valuing the company at more than $1 trillion. That valuation has since fallen by more than 25%.

“Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he … is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” Twitter’s lawsuit said. It argued that the fall in the value of Tesla and Twitter stock was behind Musk’s desire to back out of the deal.

On Monday, before the lawsuit was filed, Musk’s Twitter account posted a meme depicting the billionaire laughing, with the caption: “They said I couldn’t buy Twitter. Then they wouldn’t disclose bot info. Now they want to force me to buy Twitter in court. Now they have to disclose bot info in court.”

The shifting culture at Twitter

The confrontation between Twitter and the world’s richest man has left many employees at the company demoralized. “Lots of people are looking for jobs. Almost everybody has put feelers out to test the market,” the Twitter employee who was not authorized to speak publicly tells TIME. “People are demoralized.”

While Twitter’s legal position is that it wants to force Musk to acquire the company at the agreed $44 billion, there are still several possible outcomes other than the acquisition happening.

The two sides could end up renegotiating the deal at a lower price—an outcome more advantageous to Musk than Twitter. Musk could be forced to pay a $1 billion fee, stipulated in the agreement, to back out of his commitments—an outcome more beneficial to Twitter. Or the two sides could end up hashing out a bespoke settlement.

Whatever the outcome, Twitter has already been shaken by the ordeal. It has imposed a hiring freeze and laid off a third of its recruiting team. The publication of new work on its health and transparency initiatives, previously signature areas for the company, has slowed to a trickle. And Twitter’s CEO Parag Agrawal has fired two senior executives, including the one responsible for building new features. A Twitter spokesperson declined to comment.

Read More: Twitter Is Brilliant. The Damage It Has Done Is Undeniable

While similar cost-cutting measures are being echoed in other companies amid the fall in tech stocks, the situation appears especially fraught at Twitter, amid the uncertainty and culture change stemming from the Musk deal. Some employees say they expect another wave of resignations in early August when the next round of Twitter stock vests, allowing those who hold shares to receive payouts.

Twitter was once known as a company where employees were encouraged to publicly criticize the leadership and direction of the business. Several employees told TIME that culture has now disappeared and been replaced by one of fear and suspicion. “Our circles of trust have gotten much smaller,” said one employee.

Twitter also had a reputation for in-jokes and memes that flowed freely between staff. Employees say that while that culture still exists, the humor is growing increasingly morbid. The latest trend is for employees to share examples of their attempts to message people on Slack, only to find the account they are trying to message has vanished—either because they have quit the company or been fired.

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Write to Billy Perrigo at billy.perrigo@time.com.

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