I’m sure Lou could have terminated Malakhov’s contract. Problem is doing so wouldn’t have removed the cap hit. And once the contract is terminated it’s no longer possible to trade him, so the Devils would have been stuck with the unmovable 35+ cap hit.
I believe the premise of this though stems from the idea that terminating the contract, even as a 35+ cap hit, would remove the cap hit. I was arguing against that as well.