Musk Risks ‘Battle Royale’ With Creditors as He Remakes Twitter

Elon Musk’s project to overhaul Twitter Inc. after taking it private carries potential legal risks, even though the billionaire doesn’t have to worry about keeping shareholders happy.

Musk still has to answer to the consortium of seven banks that provided $13 billion in financing for the buyout. The banks are likely to be patient for now, while Musk works to make Twitter more profitable. If Twitter’s revenue drops, though, Musk faces litigation perils.

The clearest risks involve creditors, both the banks behind the initial deal financing and the secondary investors to whom they’re expected to farm out the loans, observers ...