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Law360 (April 27, 2020, 8:17 PM EDT) -- Real estate services company Realogy launched a suit in Delaware Chancery Court on Monday seeking to enforce a $400 million sale of its corporate relocation business to a Madison Dearborn Partners portfolio company, claiming the buyer is trying to bolt because of coronavirus-related economic woes.
Realogy Holdings Corp. wants the court to compel SIRVA Worldwide Inc., a portfolio company of private equity firm Madison Dearborn Partners LLC, to close the previously announced deal. The complaint, filed under seal, came with a supplement that indicates Realogy is also asserting a breach of contract claim against certain MDP affiliated funds, SIRVA and affiliate North American Van Lines Inc.
"Realogy strongly believes that all conditions to closing of the transaction have been and continue to be satisfied and that MDP and SIRVA have made false claims in an attempt to avoid their obligations under the purchase agreement in light of broad-based economic uncertainties due to the global COVID-19 pandemic," the company said in statement Monday.
The deal for Madison, New Jersey-based Realogy's Cartus relocation business was announced in November. Realogy President and CEO Ryan Schneider said in a statement at the time that the transaction was intended to streamline Realogy's operations and help it pay down debt.
Under the deal, SIRVA, of Oakbrook Terrace, Illinois, would purchase all Cartus assets except the Cartus Affinity business and its network of brokers and agents from Realogy's residential real estate brands, the companies said. The sale was expected to close in the first quarter of 2020, with Realogy set to receive $375 million in cash at closing followed by a $25 million deferred payment, the companies said at the time.
In Monday's statement, Realogy said closing conditions have been satisfied under the purchase agreement, clearing the way for the transaction to close this week. However, Realogy said SIRVA has countered that it "believes that not all closing conditions have been or will be satisfied by the April 30, 2020 termination date under the purchase agreement."
Realogy contends SIRVA is asserting false claims in an attempt to back out of the deal. The statement did not provide further detail on those claims.
Realogy said it "strongly disagrees with SIRVA's position and will pursue all legal remedies to ensure that SIRVA and MDP honor the commitments made under the purchase agreement." The company also filed a notice of the suit with the U.S. Securities and Exchange Commission on Monday.
In response to the suit's filing, SIRVA released a statement saying it "has been working diligently to successfully complete the acquisition of Cartus Relocation Services."
"Over the weekend, we provided Realogy with information as to why we believe that certain closing conditions that they are obligated to meet under the purchase agreement have not been and cannot be satisfied," the company said.
SIRVA contends Realogy failed to address issues raised and has breached terms of the purchase agreement by filing suit.
"SIRVA strongly disagrees with the allegations in the complaint and will vigorously defend itself against all allegations made in the complaint and will continue to enforce all of its rights under the purchase agreement, including with respect to Realogy's breaches of the purchase agreement," SIRVA said.
A representative for MDP declined to comment Monday, and counsel for Realogy did not immediately respond to a request for comment.
Realogy specializes in brokerage, franchising, relocation, mortgage and title and settlement services, according to a company statement.
SIRVA says it provides moving and relocation services in 177 countries. The company, which operates the North American moving brand, announced in 2018 that it was acquired by the Chicago-based MDP.
Realogy is represented by Edward B. Micheletti, Cliff C. Gardner, Jessica R. Kunz, Rupal K. Joshi and Justin C. Barrett of Skadden Arps Slate Meagher & Flom LLP.
Counsel information for MDP and its affiliates was not available.
The case is Realogy Holdings Corp. v. SIRVA Worldwide Inc. et al., case number 2020-0311, in the Court of Chancery of the State of Delaware.
--Additional reporting by Jeannie O'Sullivan. Editing by Aaron Pelc.
Update: This story has been updated with comments from SIRVA.
For a reprint of this article, please contact reprints@law360.com.
