Court Denies “Preliminary Injunction” For Specific Performance Of Purchase Agreement

On August 20, 2024, Justice Margaret A. Chan denied a motion for preliminary injunction seeking specific performance of a purchase agreement brought by two investment funds against several affiliated managers and holding companies. In BR Fund IV Acq Inv, LLC, et al., v. Brightwood Capital Fund III-Institutional, LP, Index No. 651756/2024, the parties entered into an agreement whereby the plaintiffs would purchase an interest in the investment funds’ limited partners by September 14, 2023. The deal never closed because of alleged breaches by the defendants. The plaintiffs then moved for a “preliminary injunction” for specific performance of the agreement, compelling defendants to close the transaction. The Court concluded that the plaintiffs’ motion more-accurately sought a mandatory injunction because it sought the case’s ultimate relief, requiring a higher standard of proof.

The Court then denied the motion. It explained:

In sum, a preliminary injunction, let alone a mandatory injunction calling for specific performance, is not warranted when plaintiffs have not shown that a reasonable probability of success on the merits on their claim that defendants' alleged breaches were the "primary cause of the failure of the consummation of the transaction," while defendants have raised issues of fact challenging plaintiffs' assertion. In so concluding, the remaining issues of the parties' respective arguments on irreparable harm, a subject that is encompassed in the Transaction Agreement's provision on specific performance, and balance of the equities are academic and will not be addressed at this point.

The attorneys at Schlam Stone & Dolan frequently counsel clients concerning injunctions and specific performance. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.