Date: Jul 20, 2026

Ayers v. Neugebauer: Post-Petition Arbitration Discovery on Estate-Owned Fiduciary-Duty Claims Violates the Automatic Stay; § 362(k) Fees Are Mandatory and Reviewed for Clear Error

1. Introduction

Ayers v. Neugebauer (5th Cir. July 16, 2026) arises from the Chapter 7 bankruptcy of With Purpose, Incorporated (formerly “GloriFi”), a collapsed financial-technology start-up. The dispute sits at the intersection of bankruptcy’s automatic stay and ongoing prepetition arbitration involving company insiders and early investors.

Parties. Appellants are James N. Ayers, the J. Nicholas Ayers 2021 Irrevocable Trust, and Ayers Family Holdings, L.L.C. (collectively, the “Ayers parties”). Appellee is Toby Neugebauer, a GloriFi co-founder and a creditor in the bankruptcy case.

Core issue. After the debtor filed Chapter 7, the Ayers parties ceased pursuing their counterclaims against the debtor (acknowledging the stay) but continued pressing claims against Neugebauer in the arbitration—most notably by pursuing his deposition post-petition. The Fifth Circuit addressed: (i) whether Neugebauer had standing to seek damages for a stay violation; (ii) whether the Ayers parties willfully violated the automatic stay; and (iii) whether the bankruptcy court’s attorney-fee award was erroneous (including fees tied to Neugebauer’s related state-court effort to halt the arbitration).

2. Summary of the Opinion

The Fifth Circuit affirmed the bankruptcy court and district court on liability and damages, holding that:

Standing: Neugebauer, as a creditor and as “an individual injured” under 11 U.S.C. § 362(k), may enforce the automatic stay and recover actual damages, including attorney’s fees.
Stay violation: The Ayers parties’ post-petition pursuit of Neugebauer’s deposition violated the automatic stay because it advanced, at least in part, an estate-owned fiduciary-duty claim (i.e., “property of the estate”), implicating 11 U.S.C. § 362(a)(3).
Fees/damages: Attorney’s fees under § 362(k) are mandatory; therefore, appellate review of the bankruptcy court’s fee determination is for clear error (not abuse of discretion). The bankruptcy court did not clearly err, including in awarding fees tied to a state-court action undertaken to stop the stay-violating arbitration conduct.

The court also clarified that it did not rely on sanctions under 11 U.S.C. § 105(a) or inherent contempt powers because § 362(k) directly applied.

3. Analysis

3.1. Precedents Cited

Standard of review in bankruptcy appeals

Elbar Invs., Inc. v. Prins (In re Okedokun), 968 F.3d 378 (5th Cir. 2020) and Lejeune v. JFK Cap. Holdings (In re JFK Cap. Holdings, LLC), 880 F.3d 747 (5th Cir. 2018): The Fifth Circuit reaffirmed the familiar framework—de novo review for legal conclusions and mixed questions; clear error for factual findings—providing the lens through which standing, stay scope, and damages were evaluated.

Standing to enforce the automatic stay and constitutional injury

St. Paul Fire & Marine Insurance Co. v. Labuzan, 579 F.3d 533 (5th Cir. 2009): The opinion leans on Labuzan for the proposition that a creditor may sue to enforce the automatic stay. Because Neugebauer was undisputedly a creditor, Labuzan supplied a straightforward path to standing.
Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014): The Ayers parties framed their standing challenge in “zone-of-interests” terms. The Fifth Circuit held that, regardless of any Lexmark effect on the doctrine, Neugebauer fit the statute’s text as “an individual injured.”
Tyler v. Hennepin County, 598 U.S. 631 (2023) (citing TransUnion LLC v. Ramirez, 594 U.S. 413 (2021)): These cases supplied the Article III “pocketbook injury” principle: Neugebauer’s expenditure of resources to respond to and stop the stay violation constituted a concrete injury.

Willful violation of the automatic stay

Campbell v. Countrywide Home Loans, Inc., 545 F.3d 348 (5th Cir. 2008) (quoting In re Chesnut, 422 F.3d 298 (5th Cir. 2005)): The Fifth Circuit applied Campbell’s three-part test: knowledge of the stay, willfulness (intent to take the act), and that the act violated the stay. Campbell/Chesnut also foreclose the notion that a creditor must specifically intend to violate the stay—knowledge plus intentional action is enough.

Estate ownership of fiduciary-duty claims and the stay’s reach

Schertz-Cibolo-Universal City Indep. Sch. Dist. v. Wright (In re Educators Grp. Health Tr.), 25 F.3d 1281 (5th Cir. 1994): This was the critical ownership precedent. The court used Educators to classify fiduciary-duty claims (of the type alleged—duties owed to the company and shareholders collectively) as belonging to the bankruptcy estate, not to individual creditors. That classification matters because acts to obtain or exercise control over estate property are stayed by 11 U.S.C. § 362(a)(3).

Attorney’s fees under § 362(k) and the correct review standard

Young v. Repine (In re Repine), 536 F.3d 512 (5th Cir. 2008): Repine supported two key points: (i) fees incurred enforcing the stay are recoverable under § 362(k); and (ii) because § 362(k) makes fees part of mandatory “actual damages,” review of the bankruptcy court’s fee determination proceeds under a clear error lens.
McMaster v. Small (In re Small), 486 F. App’x 436 (5th Cir. 2012): Cited alongside Repine to reinforce clear-error review of fee awards under § 362(k).
Cadle Co. v. Pratt (In re Pratt), 524 F.3d 580 (5th Cir. 2008) and In re Cahill, 428 F.3d 536 (5th Cir. 2005): The district court cited these for abuse-of-discretion review of fee awards generally. The Fifth Circuit distinguished them as inapplicable to the statutory posture here because § 362(k) mandates fees once a willful stay violation injures an individual.

3.2. Legal Reasoning

(a) Standing: text and Fifth Circuit precedent converge

The Ayers parties attempted to narrow standing by arguing that Neugebauer’s “creditor” status was not the source of his injury (and therefore he fell outside the interests protected by the stay). The Fifth Circuit rejected this as inconsistent with both:

Labuzan: creditors may sue to enforce the stay; Neugebauer was a creditor.
§ 362(k)’s text: “an individual injured” by a willful stay violation “shall recover” actual damages including fees. Neugebauer alleged and proved a financial injury (costs incurred responding to the stay violation).

Notably, the court avoided expanding reliance on bankruptcy courts’ broader sanction authority; instead it grounded recovery in the specific remedial statute, § 362(k). It expressly stated: “We do not” agree with the district court’s alternative reliance on inherent powers/§ 105(a) (while also deeming that issue unnecessary because § 362(k) covered the case).

(b) Willfulness: minimal intent requirement, easily satisfied

Under Campbell, willfulness does not require a purpose to violate the stay; it requires knowledge of the stay and intent to take the act. The Ayers parties had knowledge (they raised the stay in arbitration and stopped pursuing claims against the debtor). Their pursuit of a post-petition deposition was intentional. The dispute therefore hinged on the third prong: whether the acts violated the stay.

(c) Why deposition pursuit violated § 362(a)(3): “exercise control” over estate property

The opinion’s decisive move was to link the deposition effort to an estate-owned claim. The Ayers parties had asserted a breach-of-fiduciary-duty claim premised on duties Neugebauer owed to the company and to shareholders as a whole—language the court treated as aligning with Educators.

Once categorized as property of the estate, the claim triggered the automatic stay’s property-protection prong: § 362(a)(3) stays “any act ... to exercise control over property of the estate.” The court treated post-petition discovery aimed at advancing that estate property as an “exercise [of] control.”

The court also emphasized a practical indicator of estate ownership/control: the Ayers parties later agreed to dismiss the fiduciary-duty claim “in coordination with the estate,” implicitly acknowledging that the estate controlled it—yet they had pursued discovery on it after the petition date.

(d) Damages and fees: enforcement costs are compensable, even if incurred in another forum

The Fifth Circuit confirmed that “actual damages” under § 362(k) include fees incurred to stop the stay violation. It upheld inclusion of fees from Neugebauer’s state-court action seeking to stay the arbitration because that lawsuit was a foreseeable, causally connected response to the Ayers parties’ continued pursuit of the deposition post-petition.

On the amount, the bankruptcy court’s methodology mattered: it reviewed billing line-by-line, removed unrelated entries, and reduced for duplicative staffing. On that record, the Fifth Circuit found no clear error.

3.3. Impact

Discovery can be a stay violation when it targets estate-owned claims. The opinion signals that post-petition discovery in arbitration (including depositions) is not “neutral” merely because it is styled as pursuit of claims against a nondebtor; if the discovery advances an estate-owned cause of action (here, fiduciary duty), it can violate § 362(a)(3).
Sharper incentives to seek bankruptcy-court clarification before pushing forward in parallel proceedings. Parties continuing arbitration/litigation after a bankruptcy filing should scrutinize whether any claim, counterclaim, or theory is estate property. If so, continuing discovery risks mandatory damages and fees under § 362(k).
Fee review clarification. The Fifth Circuit corrected the district court’s use of abuse-of-discretion review and reaffirmed that, because § 362(k) makes fees mandatory, fee determinations are reviewed for clear error. This tends to make fee awards more resistant to appellate reduction when the bankruptcy court has made a documented, itemized assessment.
Multi-forum enforcement costs are recoverable. The approval of fees tied to a state-court action to stop stay-violating conduct broadens the practical reach of “actual damages,” encouraging injured individuals to take effective steps to halt the violation without fearing that “wrong forum” enforcement costs will be categorically excluded.

4. Complex Concepts Simplified

Automatic stay: An immediate legal pause that arises when a bankruptcy petition is filed. It stops many actions against the debtor and protects the bankruptcy estate from being seized or controlled outside the bankruptcy process.
Property of the estate: Assets and legal rights that belong to the bankruptcy estate and are administered for creditors. Some lawsuits (like certain fiduciary-duty claims) can be “estate property,” meaning only the trustee/estate may control or pursue them.
§ 362(a)(3) (“exercise control”): A part of the automatic stay that bars acts to take or control estate property. The court treated post-petition discovery aimed at prosecuting an estate-owned claim as an act of control.
§ 362(k) damages: A remedy provision: if an “individual” is injured by a “willful” stay violation, the statute says the individual “shall recover” actual damages, including attorney’s fees. “Willful” here does not mean malicious; it means the actor knew of the stay and intentionally did the act that violated it.
Clear error review: A deferential appellate standard. The reviewing court will not overturn the bankruptcy court’s factual/damages determinations unless left with a strong conviction that a mistake was made.

5. Conclusion

Ayers v. Neugebauer reinforces that the automatic stay’s protection of estate property under § 362(a)(3) can reach beyond formal pleadings to the practical realities of litigation conduct: pursuing post-petition arbitration discovery to advance an estate-owned fiduciary-duty claim is an act to “exercise control” over estate property and violates the stay. The decision also solidifies that an injured creditor may recover mandatory “actual damages” under § 362(k), including enforcement-related fees incurred in other courts, and that such fee awards are reviewed for clear error when properly grounded in the statutory mandate.