A lawyer for Elon Musk has called on the California and Delaware attorneys-general to force OpenAI to auction off a large stake in its business, intensifying a bitter fight with the business’s chief executive Sam Altman.

In a note to the states’ top law officers seen by the financial Times, Musk’s attorney Marc Toberoff said he was writing on behalf of large artificial intelligence investors who wanted to participate in an open and competitive bidding procedure for the OpenAI stake.

OpenAI had no plans for such an auction, according to a person with knowledge of the ChatGPT-maker’s thinking. Musk’s camp simply “desire more chaos”, they added.

The highly unusual attempt follows lawsuits launched by Musk in the history year over the attempt by OpenAI, which was founded as a non-boost dedicated to ensuring AI benefits humanity, to restructure as a for-boost business.

Musk co-founded OpenAI with Altman and nine others in 2015, and was the most significant early funder before leaving the board in 2018 after clashing with Altman.

OpenAI launched a for-boost subsidiary a year later in order to raise outside capital, including more than $13bn so far from its biggest backer, Microsoft. However, the non-boost entity, along with employees and investors, currently owns that for-boost subsidiary.

OpenAI is attempting to become a community advantage corporation, a type of for-boost entity committed to bettering population. The business has suggested that the non-boost’s “significant profit” in the existing for-boost would receive the form of shares in the PBC at a fair evaluation, which it says will be determined by independent financial advisers.

The PBC would run and control OpenAI’s operations and business, while the non-boost would “pursue charitable initiatives in sectors such as healthcare, education and science”, the business wrote in a December blog post.

In his note, Musk’s lawyer pushed the attorneys-general to allow outside investors to bid for the non-boost’s stake in OpenAI. If successful, that could allow an outside investor to receive a significant position in, and to exercise control over, the commence-up.

The proposed conversion to a PBC would also cruel the non-boost entity will relinquish governance over OpenAI’s business and operations. One person familiar with the circumstance said those powers could themselves be worth billions of dollars.

In the note, Toberoff suggested an auction was the only way to ensure the non-boost receives maximum worth for its assets and upholds its fiduciary duties.

The non-boost’s stake in the community advantage corporation was likely to be worth tens of billions of dollars, according to a person with knowledge of the matter.

The Tesla chief and confidant of US president-elect Donald Trump has previously accused Altman of “deceit of Shakespearean proportions”, alleging that OpenAI and Microsoft have departed from the commence-up’s original mission.

OpenAI said in December that its conversion into a PBC would “outcome in one of the best resourced non-profits in history” and multiply the donations given by early backers — including Musk — “manyfold”.

Its complicated corporate governance came under scrutiny when Altman was briefly ousted by the non-boost board in November 2023, and the business has since been weighing more conventional arrangements.

Musk, who founded his own AI commence-up xAI in 2023, has recently stepped up efforts to derail OpenAI’s conversion.

In November, he sought to block the procedure with a request for a preliminary injunction filed in California. Meta has also thrown its weight behind the suit, which is the fourth Musk has launched against OpenAI.

In legal filings from November, Musk’s throng wrote: “OpenAI and Microsoft together exploiting Musk’s donations so they can construct a for-boost monopoly, one now specifically targeting xAI, is just too much.”

Kathleen Jennings, attorney-general in Delaware — where OpenAI is incorporated — has since said her office was responsible for ensuring that OpenAI’s conversion was in the community profit, and determining whether the swap was at a fair worth.

Members of Musk’s camp — wary of Delaware authorities after a state judge rejected a proposed $56bn pay package for the Tesla boss last month — read that as a rebuke of his efforts to block the conversion, and worry it will be rushed through. They have also argued OpenAI’s PBC conversion should happen in California, where the business has its headquarters.

In a legal filing last week Musk’s attorneys said Delaware’s handling of the matter “does not inspire confidence”.

OpenAI committed to become a community advantage corporation within two years as part of a $6.6bn capital round in October, which gave it a evaluation of $157bn. If it fails to do so, investors would be able to claw back their money.

There are a number of issues OpenAI is yet to resolve, including negotiating the worth of Microsoft’s resource in the PBC. A conversion was not imminent and would be likely to receive months, according to the person with knowledge of the business’s thinking.

OpenAI declined to comment. The California and Delaware attorneys-general did not immediately respond to a request for comment.