According to documents filed in New York State Supreme Court in Manhattan and obtained by Islanders Insight, hedge fund manager Andrew Barroway is suing New York Islanders owner Charles Wang for $10 million over what his legal team has termed a broken handshake agreement on the terms of sale of the team.
The suit, filed at 1:37 p.m. today, alleges that both parties had “an agreed-upon and partially performed contract” which Wang broke when he upped his $420 million March 10 asking price to $548 million on July 16.
The 21-page complaint details the timeline of negotiations from Mar. 10 to Aug. 1 and states Barroway was under the assumption the purchase price was to be $420 million, and that he was blindsided when Wang asked for an additional $128 million months after their initial agreement.
The $10 million in damages sought by Barroway is described in the suit as a “break up” fee to which both parties in the sale had previously agreed; should the court fail to award that amount, Barroway’s lawyers argue that their client is entitled at least to recover his costs and losses suffered as a result of Wang’s refusal to sell the club at the initially agreed-upon price.
According to the filing, Barroway and Wang drew up a formal document called a Securities Purchase Agreement (SPA) that memorialized the basic framework of the sale, and that document was agreed to be “in final form” on Mar. 10. It’s this SPA that Barroway’s team cites as proof Wang was prepared to relinquish control of the Islanders as principal owner.
The deal would have given Barroway’s company NY ICE 100 percent of the equity in the Islanders; Wang’s companies—CBW Inc., CBW LP, and CBW LLC—would then have been given a 25 percent interest in NY ICE.
But because it’s the Isles, and because all news worthy of the national spotlight around this team seems to connote—and fuel—TSN’s now infamous “tire fire” comment, of course this lawsuit would be a thing that happens to Long Island’s professional hockey club. General manager Garth Snow has made all the right moves this summer to improve the on-ice product in 2014-15, but it’s the off-ice news that’s grabbing headlines again.
It’s important to note that the lawsuit is only the first step in the legal proceedings and that nothing has been decided yet.
The success of Barroway’s complaint will hinge on whether the SPA is found to be legally binding in terms of the agreement between him and Wang. The SPA contained language stating that the sale of the Islanders was contingent on NHL consent; Barroway’s lawyers posit that despite the lack of league consent that would have officially ratified the sale of the team, the SPA is binding in terms of the agreement between the businessmen.
In short, the SPA is enforceable from a Wang-owes-their-client-money standpoint, according to Barroway’s lawyers. Whether that’s found to be true may ultimately be up to the New York State Supreme Court, and is definitely a story for another day.
In the meantime, the Islanders are still in the midst of offseason preparations for the final season at Nassau Veterans Memorial Coliseum. And despite the sale rumors—complete with legal filings—this club still has to go about its business. Regardless of how the legal battle between its current owner and its one-time almost-owner shakes out, the Isles will continue to work out and gear up for training camp in September.
I have no idea how the lawsuit will play out, mostly because I’m a) not Charles Wang or Andrew Barroway, b) not a lawyer, and c) not prone to reckless speculation. What I will say about the situation is that it likely won’t have an adverse effect on the players.
Having spent time in the dressing room and seeing firsthand how this group has battled adversity in the past, the lawsuit won’t be anything more than an annoyance, something about which they’ll be asked questions by reporters and to which they’ll give perfunctory attention. Because once the season starts, their sole focus will be on the next game on the schedule.
Which is exactly how it should be.
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