A newly filed public complaint with some redactions brings into light the arguments at the heart of the dispute over a $400 million sale of Cartus’ relocation business between Realogy and SIRVA Worldwide.
In the complaint, Realogy argues that SIRVA is inappropriately citing damage done to Cartus by COVID-19 to pull out of the agreed-upon sale. Realogy also said SIRVA is arguing, without any justification, that Realogy could go bankrupt before consummating the deal.
Earlier this week in a statement, Realogy said it delivered notice to SIRVA on April 24 that it satisfied all closing conditions to Sirva’s obligations under the purchase agreement and was committed to closing the transaction on April 29. Realogy also said it delivered all required financial information over the past two months that were required in the purchase agreement.
The next day, SIRVA allegedly told Realogy that it believes not all closing conditions have been satisfied or will be satisfied by the April 30 termination date set under the purchase agreement.
A spokesperson for SIRVA said in a statement sent to Inman earlier this week that the complaint doesn’t address any of the issues SIRVA raised. The complaint itself, the spokesperson argued, was a violation of the purchase agreement.
In the complaint, Realogy said SIRVA is blaming damage done to Cartus by COVID-19 as a reason to pull out. If there’s any disparate impact caused by COVID-19, it’s to SIRVA, not Cartus, the complaint says.
“According to the buyer, COVID-19 has caused a material adverse effect, excusing it from closing the transaction despite the fact that all conditions to close are otherwise satisfied (other than those conditions that by their terms or nature are to be satisfied at closing, each of which is capable of being satisfied at closing,” the complaint reads.
“But even a cursory review of buyer’s purported justifications demonstrates the falsity of its position,” the complaint continues. “Buyer’s arguments smack of ‘buyer’s remorse,’ not a legitimate right to avoid closing the transaction.”
Under the purchase agreement SIRVA Worldwide, a global relocation firm, was to pay Realogy $375 million in cash upfront and receive $25 million in deferred payments for Cartus’ relocation business.
As part of the deal, Realogy also signed a five-year agreement with SIRVA for brokerage services, so the company’s agents will continue to get relocation referrals from the program. Realogy already receives about 1,000 relocation transactions from SIRVA annually.
SIRVA also contends — baselessly, according to Realogy — that Realogy, “‘may not remain a going concern long enough to consume the transactions,’ contemplated by the purchase agreements.
“Both of these arguments are simply untrue and plainly invented to serve as supposed justification for SIRVA’s refusal to close the transaction,” the complaint says.
Realogy is seeking for a judge to compel the deal to close. The lawsuit was filed in the Court of Chancery of the State of Delaware.
A spokesperson for SIRVA told Inman, in a statement, that the company remains well-positioned operationally and financially to continue supports its clients and rejects any assertion that it’s own financial condition led to the current situation.
“SIRVA had been working diligently to successfully complete the acquisition of Cartus,” the spokesperson said. “After numerous requests for updated information, SIRVA and its financing sources received actual and forecasted performance for the Cartus business shortly before the planned closing.”
“Upon receipt of this information, SIRVA made further inquiries of Cartus based upon concerns with the information provided, including that certain conditions would not be satisfied based on the information received,” the statement continued. “Unfortunately, Realogy’s response was to sue to get relief it is not entitled to under the transaction documents. SIRVA intends to pursue contractual remedies against Realogy related to its multiple breaches.”
See the complaint below, with redacted portions.