Buckeye’s $6.5 Billion IFM Buyout Challenged in Delaware (1)

Litigation over the $6.5 billion take-private buyout of pipeline owner Buckeye Partners LP by affiliates of Australian fund manager IFM Investors Pty. Ltd. has landed in Delaware Chancery Court after false starts in two federal courts.

The lawsuit, docketed Monday, accuses Buckeye’s board of using accounting tricks to force unitholders cashed out of the partnership to pay taxes on up to $350 million in post-closing income that would remain with the company after its sale to IFM, which is owned by a group of Australian pension funds.

Although Buckeye technically disclosed the massive “gift” to IFM Global Infrastructure Fund, it ...