We are representing the bank defendant group in a case stemming from the banks’ status as former lenders to Ferrellgas 

Davis Polk is representing an 11-bank defendant group in a fraudulent transfer case stemming from the banks’ status as former lenders to Ferrellgas, L.P. under a credit agreement. Ferrellgas, L.P. is a subsidiary of Ferrellgas Partners, L.P., one of the nation’s largest retail marketers and leading distributors of propane and related accessories to residential, industrial and agricultural customers. 

In 2019, plaintiff Eddystone Rail Company, LLC filed a complaint in New York state court against our clients who were a consortium of lenders to Ferrellgas that acquired plaintiff’s counterparty to a rail services agreement. The plaintiff alleged that Ferrellgas and its affiliates to which the lenders provided financing stripped away the assets of the plaintiff’s counterparty and that the lenders were subsequent transferees of intentional and constructive fraudulent transfers of certain of those assets.

In 2020, we successfully removed the action to federal court in the Southern District of New York under the Edge Act, 12 U.S.C. § 632, which provides that federal courts have jurisdiction over disputes involving a nationally chartered bank that arise out of foreign or international banking transactions. In denying the plaintiff’s motion to remand, the district court agreed with Davis Polk’s argument that removal was proper because the banking transactions at issue constituted “international or foreign banking” within the meaning of the Edge Act.

Davis Polk secured another win in September 2021, when the court granted our motion to dismiss the complaint in full. The court rejected the more relaxed pleading standard that the plaintiff contended was applicable to alleged subsequent transfers, and held that the plaintiff’s allegations regarding the subsequent transfers of assets to the bank defendants were too conclusory to satisfy the applicable pleading. 

In April 2022, the plaintiff sought to amend the complaint. In opposition to the motion to amend, the defendants argued that the plaintiff’s undue delay in pleading the proposed amendments would prejudice defendants, and additionally that amendment would be futile because the proposed amendments failed to cure the plaintiff’s pleading deficiencies. On March 13, 2023, the court denied the plaintiff’s motion for leave to amend on those grounds, adopting our reasoning and dismissing the complaint in full.

The plaintiff appealed the district court’s three decisions to the U.S. Court of Appeals for the Second Circuit.  Davis Polk represented our clients at the oral argument on the appeal held on February 13, 2024. The Second Circuit affirmed the district court’s denial of the motion to remand and its decision on the motion to dismiss, and plaintiff has stayed the limited remaining issues.

The Davis Polk civil litigation team includes partner Lara Samet Buchwald, counsel Tina Hwa Joe and associate Chui-Lai Cheung. All members of the Davis Polk team are based in the New York office. 

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