Trustee v. Winston & Strawn LLP Motion Granted in Part

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April 14, 2026 Get Citation Alerts Download PDF Add Note

In re: With Purpose, Inc.; Scott M. Seidel, Trustee v. Winston & Strawn LLP, and Michael Blankenship

United States Bankruptcy Court, N.D. Texas

• Citations: None known
• Docket Number: 25-03105

• Precedential Status: Unknown Status

• Opinion

• Authorities (21)

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Trial Court Document

ER. CLERK, U.S. BANKRUPTCY COURT
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The following constitutes the ruling of the court and has the force and effect therein described.
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Signed April 13, 2026 $$$ AA@=>_
United States Bankruptcy Judge

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
In re: §
§ CASE NO. 23-30246-MVL7
WITH PURPOSE, INC. § (CHAPTER 7)
§
Debtor. §
§
§
SCOTT M. SEIDEL, TRUSTEE, §
§
Plaintiff, § ADVERSARY NO. 25-03105-MVL
§
Vv. §
§
WINSTON & STRAWN LLP, and § RELATED TO ECE NO. 7
MICHAEL BLANKENSHIP, §
§
Defendants. §
§
§
§
MEMORANDUM OPINION AND ORDER GRANTING IN PART DEFENDANTS’
MOTION TO DISMISS

I. INTRODUCTION
Before the Court is the Motion to Dismiss Trustee’s Original Complaint and Brief in
Support (collectively, the “Motion to Dismiss”) filed by Defendants Winston & Strawn LLP
(“Winston & Strawn”) and Michael Blankenship (“Mr. Blankenship” and, together with
Winston & Strawn, the “Defendants”) on November 3, 2025 [ECF Nos. 7, 8]. Through the Motion,
the Defendants seek to dismiss all of the causes of action alleged by Plaintiff Scott M. Seidel—the
duly appointed Chapter 7 Trustee (the “Trustee” or the “Plaintiff”)—in the Original Complaint
(the “Complaint”) filed by the Trustee on September 17, 2025 [ECF No. 1].
In response, the Trustee filed an Objection to Defendants Winston & Strawn LLP’s and

Michael Blankenship’s Motion to Dismiss Trustee’s Original Complaint and Brief in Support
(collectively, the “Response”) on December 5, 2025 [ECF Nos. 14, 15]. Finally, the Defendants
filed a Reply Brief in Support of Winston & Strawn LLP’s and Michael Blankenship’s Motion to
Dismiss under Rule 12(b)(6) (the “Reply”) on December 17, 2025 [ECF No. 17].
The Court held a hearing on the Motion to Dismiss on January 6, 2026. Counsel for the
Trustee and the Defendants appeared. After hearing arguments, the Court took the Motion to
Dismiss under advisement. The Court has considered the briefing and arguments of counsel and
concludes that the Motion to Dismiss should be GRANTED IN PART and DENIED IN PART.
The following constitutes the Court’s analysis underlying its ruling.

II. JURISDICTION
Bankruptcy subject matter jurisdiction exists to determine this motion pursuant to 28
U.S.C. § 1334. Venue is proper under 28 U.S.C. §§ 1408 and 1409.
III. FACTUAL AND PROCEDURAL BACKGROUND
A. Factual History1
The Court will provide a relatively comprehensive factual history underlying the Motion
to Dismiss. The dispute in this matter revolves around what the Trustee alleges to be “massive

financial harm” caused by the Defendants’ “malpractice and intentional breaches of [their]
fiduciary duties.” ECF No. 1 at 2. More specifically, the Trustee alleges that, due to Winston &
Strawn’s “remarkable malfeasance” with respect to its representation of With Purpose, Inc. (the
“Debtor” or “GloriFi”), the valuation of the Debtor plummeted from $1.7 billion to zero in mere
months. Id. In what the Trustee contends is a case reminiscent of a John Grisham novel about the
“dangers in, and destruction caused by, conflicts of interest” in the legal profession, the allegations
in the Complaint involve GloriFi’s retention of Winston & Strawn to provide legal services and
guidance to the Debtor in order to close a De-SPAC transaction (the “De-SPAC Transaction”)

with DHC Acquisition Corp. Id. at 2–3. According to the Trustee, GloriFi was Winston & Strawn’s
client, and thus the firm owed fiduciary duties to GloriFi. Id. at 3. However, the Defendants
purportedly “betrayed” their fiduciary duties in favor of appeasing GloriFi’s Chief Executive
Officer, Toby Neugebauer (“Mr. Neugebauer”). Id. This betrayal took shape in the form of the Defendants “knowingly and actively
participating in” a variety of “schemes” that the Trustee alleges were designed to benefit Mr.
Neugebauer’s personal interests to the detriment of GloriFi, which proximately caused GloriFi’s
existing investors to lose confidence in GloriFi and further resulted in GloriFi’s inability to close

1 For purposes of this Order, the factual background is based upon the facts contained in the Complaint, which the
Court accepts as true for purposes of the Motion to Dismiss in accordance with established authority.
the De-SPAC Transaction at a public valuation of $1.7 billion. Id. In other words, the Defendants’
wrongdoing proximately caused the Debtor to lose nearly $2 billion in enterprise value. Id. Taking a step back chronologically, the Trustee alleges that Winston & Strawn signed an
engagement letter with GloriFi on December 30, 2021 (the “Engagement Letter”). As noted in
the Complaint, the Engagement Letter made clear that “the firm’s client will be GloriFi and not

any director, officer, or employee of GloriFi. The Scope of our engagement will be to represent
GloriFi in connection with a [De-SPAC Transaction].” Id. at 8. Additionally, the parties agreed that
the scope of their business relationship would be limited to performance of services related to the
De-SPAC Transaction and other matters with which GloriFi could from time to time request
Winston & Strawn’s assistance with. Id. In conjunction with the Engagement Letter, the Trustee
alleges that the Defendants took on various fiduciary obligations with respect to GloriFi, including
the duties of loyalty, good faith, prudence, candor, and confidentiality. Id. However, the Trustee asserts that the Defendants’ ability to uphold their fiduciary
obligations to GloriFi was short-lived, and that scores of e-mails between Winston & Strawn’s

attorneys and Mr. Neugebauer reveal that the Defendants’ loyalties lied with Mr. Neugebauer
rather than GloriFi. Id. More specifically, on or around March and into April 2022, Winston &
Strawn purportedly assisted Mr. Neugebauer in the development and execution of a “scheme” to:
(1) remove independent board members Mr. Neugebauer believed were obstructing his ability to
engage in self-dealing transactions; (2) replace those board members with his close friends and
business partners; and (3) amend GloriFi’s governing documents to facilitate self-interested
transactions. Id. at 9.
Understanding the alleged breach of the Defendants’ fiduciary obligations, however,
requires a better understanding of Mr. Neugebauer’s alleged breaches of his own fiduciary
obligations to GloriFi. In late March 2022, GloriFi was on the “precipice” of completing the De-
SPAC Transaction and going public, and in order to satisfy the financial requirements to close the
De-SPAC Transaction, the Debtor needed an additional round of funding. Id. at 10. However, it is
alleged that, instead of seeking out arms-length funding sources, Mr. Neugebauer proposed his
own self-interested transactions to improve his economic position relative to GloriFi’s other

stakeholders. Id. Mr. Neugebauer’s plan, which he emailed to Mr. Blankenship on March 27, 2022,
was to “put in 10mm of super senior convertible note at the 750 valuation,” and he specifically
asked Mr. Blankenship if he could make the note “super senior and secured” through stock
belonging to a subsidiary of GloriFi—Animo Services, LLC (“Animo”). Id.2
This alleged scheme did not go unnoticed by GloriFi’s other two board members, Nick
Ayers (“Mr. Ayers”) and Keri Findley (“Ms. Findley”), who emailed Mr. Blankenship and other
attorneys at Winston & Strawn in late March 2022, specifically asking whether Mr. Neugebauer’s
request needed shareholder approval and whether Mr. Neugebauer’s request violated various side
letters held by GloriFi’s Series 1 noteholders (the “Noteholders”). Id. at 10–11.

Internal emails at Winston & Strawn indicated that its attorneys did not believe the firm
had any ability to issue debt “senior to [the Noteholders] without their consent,” and especially, as
Mr. Blankenship referred to in jest, a “super, super secret senior.” Id. at 12 (emphasis in original).
Additional email exchanges between Mr. Neugebauer and the Defendants show that Mr.
Neugebauer instructed Winston & Strawn to send to GloriFi’s board, for immediate approval, an
Asset Purchase and Assumption Agreement and Marketing Agreement, which provided for
transactions transferring GloriFi’s “Tech Stack” to a separate entity wholly owned and/or
controlled by Mr. Neugebauer. Id. at 12–13. According to an email exchange between Mr.

2 The Court notes that Animo is in a separately filed Chapter 7 bankruptcy case in this Court. See Case No. 23-
30035-mvl7.
Neugebauer, Mr. Blankenship, and other attorneys at Winston & Strawn, Mr. Neugebauer indicated
that he wanted the Tech Stack for himself, but that he did not want the proposed transaction
“discussed with anyone that is not on this email.” Id. at 13.
Despite the relatively obvious self-interested nature of Mr. Neugebauer’s transaction
proposal, the Trustee alleges that Winston & Strawn proceeded to assist Mr. Neugebauer in

negotiating the terms of the transaction. Id. at 14. During this negotiation process, however, the
Trustee alleges that Winston & Strawn avoided involving Mr. Ayers and Ms. Findley and instead
took direction solely from Mr. Neugebauer. Id. Moreover, despite internal emails indicating that
Winston & Strawn recognized that it was “very odd” that GloriFi was set to have a stockholders
meeting with respect to Mr. Neugebauer’s proposal prior to board approval of the transaction,
Winston & Strawn proceeded to oversee a GloriFi board meeting in which Mr. Neugebauer
allegedly made “overt threats of litigation” against Mr. Ayers and Ms. Findley and ultimately
participated in a vote related to his own self-interested transaction. Id. at 14–15. The situation
further deteriorated with GloriFi’s other board members, including allegations of conflict of

interests, misrepresentations made by Mr. Neugebauer to both shareholders and board members of
GloriFi, and consent forms sent to GloriFi’s shareholders designed to approve Mr. Neugebauer’s
proposals inconsistent with the term sheet that had actually been proposed by Mr. Neugebauer. Id. at 15–17.
Rather than take immediate steps to handle the situation involving Mr. Neugebauer’s
proposed transactions appropriately, the Defendants effectively doubled their efforts to assist Mr.
Neugebauer, primarily by helping Mr. Neugebauer remove Mr. Ayers and Ms. Findley from
GloriFi’s board and replace them with close friends and/or business associates of Mr. Neugebauer. Id. Pointedly, as the relationship between Mr. Neugebauer, Mr. Ayers, and Ms. Findley
deteriorated, rather than step in to resolve the situation, the Defendants joked internally that they
wanted “off of this ride”, that the devolving situation was a “[m]ess”, and that they should “lay
low.” Id. at 17–19. The Trustee alleges that the Defendants continued the approach of “appeasing”
Mr. Neugebauer, all while recognizing in internal emails that the firm did not want to “look like
we are doing the bidding of the controller.” Id. at 20–21.3

In sum, the Trustee alleges that the Defendants’ “misdeeds and collusion” with Mr.
Neugebauer—namely Winston & Strawn’s conflicted representation of GloriFi and Mr.
Neugebauer, malpractice, breaches of fiduciary duties, and its active participation in facilitating
Mr. Neugebauer’s breaches of his own fiduciary duties—proximately caused GloriFi’s inability to
finalize the De-SPAC Transaction. Id. at 28.4
B. Procedural History
In the Complaint, the Trustee asserts six causes of action against the Defendants: (1)
Negligence (Legal Malpractice) against both Defendants; (2) Aiding and Abetting/Knowing
Participation in Mr. Neugebauer’s Breach of Fiduciary Duty to the Debtor against both Defendants;

(3) Avoidance of a Constructive Fraudulent Transfer pursuant to § 548 of the Bankruptcy Code
against Winston & Strawn; (4) Avoidance of a Constructive Fraudulent Transfer pursuant to the
Texas Uniform Fraudulent Transfer Act (“TUFTA”) against Winston & Strawn; (5) Recovery of
Voidable Transfer pursuant to § 550 of the Bankruptcy Code against Winston & Strawn; and (6)

3 The Defendants were not the only parties with concerns. The Trustee notes that Winston & Strawn began receiving
letters from counsel to certain Noteholders, who likewise raised concerns with respect to Mr. Neugebauer’s self-
dealing transactions. Id. at 22. The Noteholders believed that GloriFi was suffering a governance crisis, which was
then leading to a financial crisis, and that Mr. Neugebauer and the newly appointed members of the GloriFi board
had demonstrated an “unwillingness” to conduct business consistent with their contractual obligations. Id.

4 The Court notes that, in the Complaint, the Trustee provides further allegations with respect to the Defendants’
continued conflict of interests between GloriFi and Mr. Neugebauer, much of which took place post-petition.
Although the parties addressed these particular allegations in the pleadings, the Court does not find a summary of
the Defendants’ alleged post-petition actions to be pertinent for purposes of this Order.
Disallowance of Claim pursuant to § 502 of the Bankruptcy Code against Winston & Strawn. Id.
at 32–33.
In the Motion to Dismiss, the Defendants raise several arguments why the Court should
dismiss the entirety of the Complaint. First, the Defendants argue that Count I must be dismissed
because, as a matter of law, the Trustee has not plausibly alleged that the Defendants breached a

duty of care by completing what they refer to as “routine legal work.” ECF No. 8 at 16.
Additionally, the Defendants argue that the Trustee has not plausibly pleaded causation under
Count I, and has not sufficiently alleged that, even if the Defendants breached a duty of care under
Texas law, that such a breach was the proximate cause of GloriFi’s failure to close the De-SPAC
Transaction. Id. at 21–23.
Second, the Defendants argue that Count II must be dismissed because, as a matter of
Delaware law, the Defendants cannot be liable for aiding and abetting the breach of a fiduciary
duty when the Defendants separately owed fiduciary duties to GloriFi. Id. at 24. Alternatively,
Count II should be dismissed because: (1) the Trustee’s allegations pertain to transactions that were

not consummated; (2) the Trustee has not plausibly alleged that the Defendants knowingly
participated in Mr. Neugebauer’s alleged breach of his fiduciary duties; and (3) any allegations
with respect the Defendants’ post-petition conduct do not support any of the Trustee’s claims,
especially Count II. Id. at 25–29.
Third, the Defendants argue that Counts III and IV, and thus Counts V and VI, should be
dismissed because the Trustee has not sufficiently pleaded that the Debtor did not receive
reasonably equivalent value by virtue of Winston & Strawn’s legal services. Id. at 30–33.5

5 The Court notes that, in the Response the Trustee requests leave to amend Counts III–VI, and additionally requests
leave to amend Counts I and II if the Court were to grant the Motion to Dismiss with respect to the first two counts.
ECF No. 15 at 28–29.
IV. STANDARD OF REVIEW
A. Rule 12(b)(6)
Rule 12(b)(6), incorporated by Rule 7012(b) of the Federal Rules of Bankruptcy Procedure
(the “Bankruptcy Rules”), authorizes dismissal of a complaint that “fail[s] to state a claim upon
which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In evaluating a Rule 12(b)(6) motion to

dismiss, the Court must accept all well-pleaded facts as true, and view them in the light most
favorable to the plaintiff. Walker v. Beaumont Indep. Sch. Dist., 938 F.3d 724, 735 (5th Cir. 2019)
(quoting Campbell v. Wells Fargo Bank, N.A., 781 F.2d 440, 442 (5th Cir. 1986)). However, the
Court need not “strain to find inferences favorable to the plaintiffs.” Southland Sec. Corp. v.
INSpire Ins. Sols. Inc., 365 F.3d 353, 361 (5th Cir. 2004) (internal quotations omitted).
To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient
factual allegations, which, if accepted as true, state a plausible cause of action. Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim
satisfies the plausibility test ‘when the plaintiff pleads factual content that allows the court to draw

the reasonable inference that the defendant is liable for the misconduct alleged.” In re Reagor-
Dykes Motors, LP, No. 18-50214-RLJ, 2021 WL 2546664, at *1 (Bankr. N.D. Tex. June 3, 2022)
(Jones, J.). This plausibility requirement sits somewhere between possible and probable, and is
satisfied where the plaintiff’s pleaded facts allow the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678 Although the complaint is not required to provide detailed factual allegations, it must
provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause
of action will not do.” Twombly, 550 U.S. at 555. However, numerous courts within the Fifth
Circuit have reiterated that because “a complaint must be liberally construed in favor of the
plaintiff, a motion to dismiss under Rule 12(b)(6) is generally viewed with disfavor and is rarely
granted.” Reagor-Dykes, 2021 WL 2546664 at *2 (citation omitted). In reviewing the motion, the
court looks to the pleadings, alongside any documents attached or incorporated into the complaint
by reference. See Mirant Corp. v. Southern Co., 337 B.R. 107, 115 (N.D. Tex. 2006).
V. LEGAL ANALYSIS

There are several issues before the Court, primarily with respect to Counts I–IV: (1)
whether the Trustee has sufficiently pleaded all of the elements for a professional
negligence/malpractice claim under Count I; (2) whether, after establishing that either Texas or
Delaware law applies, the Trustee has sufficiently pleaded a viable claim for aiding and abetting a
breach of Mr. Neugebauer’s fiduciary duties under Count II; and (3) whether the Trustee
sufficiently pleaded the necessary elements to maintain constructive fraudulent transfer claims
under Counts III and IV. These issues are addressed in turn below.
A. Count I—Professional Negligence (Malpractice)
As a threshold matter, the parties do not dispute that Texas law applies to Count I of the

Complaint. Under Texas law, a plaintiff asserting a legal malpractice claim must, at the motion to
dismiss stage, plausibly allege that: (1) the attorney owed the plaintiff a duty; (2) the attorney
breached that duty; (3) the breach proximately caused the plaintiff’s injuries; and (4) damages
occurred. See Taylor v. Scheef & Stone, LLP, Civ. Action No. 3:19-CV-2602-D, 2020 WL 4432848,
at *4 (N.D. Tex. Jul. 31, 2020) (quoting Peeler v. Hughes & Luce, 909 S.W.2d 494, 496 (Tex.
1995)) (internal quotations omitted). The parties do not dispute the first or fourth elements, but the
Defendants take particular issue with the breach and causation elements as alleged in the
Complaint.
i. Breach
Courts applying Texas law have made it consistently clear that attorneys “owe their clients
the duty to act with ordinary care—i.e., in a manner consistent with the standard of care that would
be expected to be exercised by a reasonably prudent attorney.” Id. (quoting Beck v. L. Offs. of
Edwin J. (Ted) Terry, Jr., P.C., 284 S.W.3d 416, 426 (Tex. App.—Austin 2009, no pet.)) (internal
quotations omitted). The standard for determining whether an attorney has upheld this standard of

care is an “objective exercise of professional judgment, not the subjective belief that [the
attorney’s] acts are in good faith.” Cosgrove v. Grimes, 774 S.W.2d 662, 665 (Tex. 1989).
Therefore, if an attorney’s decision is one that a reasonably prudent attorney could have made
under the same or similar circumstances, “it is not an act of negligence even if the result is
undesirable.” Id. In the Motion to Dismiss, the Defendants contend that, despite the myriad of allegations
related to the Defendants’ purported breach of their duty of care, almost none of the allegations in
the Complaint plausibly establish that the Defendants either violated GloriFi’s organizational
documents or that their actions were illegal or fraudulent. ECF No. 8 at 18–19. The Defendants

argue that the focus should instead be on the actual legal work performed by Winston & Strawn,
pursuant to its scope of representation, and that even the Trustee’s allegations in that respect go no
further than alleging that the Series 2 Notes were incorrectly dated at the “instruction of the client.”
Id. at 17. In essence, the Defendants’ position is that, once the Court effectively wades through
what they contend are non-pertinent allegations by the Trustee, none of the remaining allegations
in the Complaint form a basis for a malpractice claim or a breach of the Defendants’ duty of care.
Put simply, the Defendants argue that the Trustee “cannot state a claim for malpractice because it
is expressly not the responsibility of corporate counsel to provide business advice on which
fundraising proposals might be superior or to select directors for an organization.” Id.
The Defendants further rely upon the Texas Disciplinary Rules of Professional Conduct
(the “Disciplinary Rules”), pointing out that not only do the Disciplinary Rules not create
standards of liability, but they instead provide that “[w]hen constituents of the organization make
decisions for it, the decisions ordinarily must be accepted by the lawyer even if their utility or
prudence is doubtful.” Id. (quoting Tex. Disciplinary R. Pro. Conduct 1.13, cmt. 6). Accordingly,

they argue that the Trustee incorrectly focuses on the Defendants’ “alleged failure to compel [Mr.]
Neugebauer to cede ‘unilateral power’ of control over GloriFi” rather than whether the Defendants
performed any legal work improperly. Id. at 18.
Conversely, the Trustee argues the Defendants ignore that the basis for Count I derives
from the Defendants’ knowledge that Mr. Neugebauer was engaging in self-interested transactions
in breach of his fiduciary duties to GloriFi (the Defendants’ client), the transactions would likely
cause severe harm to GloriFi, and that the Defendants failed to warn or “adequately advise” GloriFi
of the known risks associated with Mr. Neugebauer’s proposals. ECF No. 15 at 10–11. The Trustee
argues that the Defendants were obligated to take remedial action on behalf of their client, but

instead both failed to take any action to protect their client’s interests and “actively participated
and assisted” in Mr. Neugebauer’s own breaches. Id. at 11.
Moreover, the Trustee notes that the Defendants’ reliance on Rule 1.13 of the Disciplinary
Rules bypasses subsection (b) of the rule, providing that a lawyer representing an organization
must take reasonable remedial actions whenever the lawyer learns or knows that:
(1) an officer, employee, or other person associated with the organization has committed
or intends to commit a violation of a legal obligation to the organization or a violation of
law which reasonably might be imputed to the organization;

(2) the violation is likely to result in substantial injury to the organization; and

(3) the violation is related to a matter within the scope of the lawyer’s representation of the
organization.
Id. at 13; Tex. Disciplinary R. Pro. Conduct 1.13(b).
In light of the above-mentioned actions, and in conjunction with the Disciplinary Rules,
the Trustee contends that that Complaint contains more than sufficient allegations to highlight how
and when the Defendants’ actions and/or inactions fell “well below the standard of care” and,
therefore, constitute negligence.” Id. at 12.
The Court ultimately agrees with the Trustee that the Complaint contains sufficient
allegations of a breach of the Defendants’ duty of care. First, while it is true that the Disciplinary

Rules do not give rise to a cause of action nor can they form the basis of civil liability under Texas
law, courts applying Texas law have nevertheless held that because the Disciplinary Rules
“establish standards of conduct by lawyers, a lawyer’s violation of a Rule may be evidence of
breach of the applicable standard of conduct.” DLA Piper LLP (US) v. Linegar, 539 S.W.3d 512,
518 (Tex. App.—Eastland 2017, pet. denied) (citation omitted) (internal quotations omitted). The
Court finds the Disciplinary Rules especially pertinent in this matter.
The Defendants primarily rely upon Comment 6 of Disciplinary Rule 1.13, which states
that certain circumstances may deem it “reasonably necessary” for an attorney to have an action
taken by a constituent of the organization the attorney represents “reviewed by a higher authority

in the organization.” See ECF No. 17 at 6–7; Tex. Disciplinary R. Pro. Conduct 1.13, cmt. 6.
According to the Defendants, the complexity involved with Mr. Neugebauer’s proposed
transactions, to the extent that the Defendants were obligated to report any concerns of same, were
“already before and among the highest authority in the organization: its CEO, Board members, and
shareholders.” ECF No. 17 at 7. In other words, when the “ultimate authorities” at GloriFi had
already determined a course of action, regardless of whether that action is imprudent, the
Defendants were not liable for failing to take “unspecified” remedial actions to stop Mr.
Neugebauer’s transactions. Id. The Court disagrees with this siloed, albeit clever, interpretation of the allegations in the
Complaint. The dispute regarding Mr. Neugebauer’s related party transactions was not necessarily
“before and among” GloriFi’s highest authorities. Ample allegations in the Complaint indicate that
board members were consistently asking Winston & Strawn to weigh in on the legality of Mr.
Neugebauer’s proposals and allegedly receiving no advice in return. Likewise, board members

repeatedly warned Winston & Strawn of inaccurate or misleading communications by Mr.
Neugebauer that the firm was overtly acting upon.
Moreover, it seems problematic that Mr. Neugebauer’s knowledge of his own transactions
while he was CEO of GloriFi to be a sufficient panacea absolving the Defendants from taking any
further remedial actions. Under this premise, Disciplinary Rule 1.13 would contain a blind spot in
both construction and application, in that an attorney could never be held liable to failing to take
remedial actions for the benefit of their client so long as the allegedly unlawful actions taken were
orchestrated by the client’s chief officer.
Additionally, despite the Defendants’ narrow reading of Comment 6 as an escape hatch for

alleged liability, they overlook Comment 7 to Disciplinary Rule 1.13. Comment 7 provides that,
in some cases, and so long as the attorney for the organization does not violate Disciplinary Rules
1.02 or 1.05, further remedial action may include “revealing information relating to the
representation to persons outside the organization,” especially if the attorney has exhausted all
remedies within the organization. Tex. Disciplinary R. Pro. Conduct 1.13, cmt. 7. Although the
Trustee may admittedly be equivocal on what remedial actions the Defendants should have taken,
taking the allegations in the Complaint as true, it is not equivocal that the Defendants internally
recognized that the potential for a conflict existed, that the expected course of action would be for
the interested party to recuse himself, and that the board members were concerned about that
individual’s honesty and self-dealing when it came to disclosures.
As alleged in the Complaint, when the GloriFi boardroom was on fire, the Defendants’
position was to let it burn. At this stage in the process, the Court is inclined to stress test that
proposition through further proceedings. Here, it is at least plausible that the Defendants’ conscious

decision to “lay low” and allow Mr. Neugebauer to pursue a related party transaction, unimpeded
by contrary counsel, constitutes a breach of the Defendants’ duty of care with respect to Winston
& Strawn’s representation of GloriFi.
ii. Causation
The Defendants further contend that, even if the Court were to find that the Defendants
breached a standard of professional care with respect to Winston & Strawn’s representation of
GloriFi, the Trustee has nevertheless failed to sufficiently plead that the Defendants’ breach was
the proximate cause of GloriFi’s alleged $1.7 billion loss in valuation following the company’s
inability to close the De-SPAC Transaction. ECF No. 8 at 21–23. The Defendants’ argument on

this element is relatively simple: the Trustee does not sufficiently allege that the Defendants caused
Mr. Neugebauer to refuse to cede control over GloriFi, nor does the Trustee plausibly allege that
any action taken by the Defendants could have prevented Mr. Neugebauer from maintaining
control over GloriFi. Id. Accordingly, the Defendants cannot plausibly be the proximate cause of
GloriFi’s financial collapse when there was not any action that they could or should have taken
that would have led to a different result.
In the Response, the Trustee provides several counterarguments. First, the Trustee argues
that the Defendants are attempting to hold the allegations in the Complaint to a higher pleading
standard than Rule 8 of the Federal Rules of Civil Procedure (the “Rules”) requires. ECF No. 15
at 17–19. Second, the Trustee argues that he has sufficiently established that the Defendants knew
GloriFi’s potential investors had lost confidence based upon Mr. Neugebauer’s alleged actions and
failed to advise GloriFi to implement the necessary measures for completing the De-SPAC
Transaction. Id. at 19. Finally, the Trustee argues that the Defendants’ futility argument with
respect to course-correcting Mr. Neugebauer’s actions, and whether the Trustee sufficiently

pleaded what actions the Defendants could or should have taken, are beyond what is required of
the Trustee at the motion to dismiss stage. Id. at 20. Rather, the Trustee need only plead sufficient
facts “to give rise to a reasonable hope that discovery will reveal evidence” of causation. Id.
(quoting Lormand v. US Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009)) (internal quotations
omitted).
The Court once again agrees with the Trustee and finds that causation has been sufficiently
alleged in the Complaint. As noted by the Supreme Court of Texas, the primary components of
proximate cause are “cause in fact and foreseeability.” Rogers v. Zanetti, 518 S.W.3d 394, 402 (Tex. 2017). Cause in fact, or whether a defendant’s act was a “substantial factor” in the alleged

harm, “requires a showing that the act or omission was a substantial factor in bringing about the
injury and without which harm would not have occurred.” Id. Additionally, foreseeability
addresses the “legal cause” and a determination of the “proper scope of a defendant’s legal
responsibility for a negligent conduct that in fact caused harm.” Id. In other words, foreseeability
addresses “whether the harm incurred should have been anticipated and whether policy
considerations should limit the consequences of a defendant’s conduct.” Id. Similar to the arguments posited by the defendants in Murillo Modular Group, Ltd. v.
Sullivan, the Defendants in this case “appear to confuse an issue of proof with an issue of pleading
sufficiency.” No. 3:13-CV-3020-M, 2015 WL1442977, at *7 (N.D. Tex. Mar. 31, 2015). The
Defendants repeatedly argue that the Trustee’s claim should fail because the Trustee did not
sufficiently allege what the Defendants could or should have done that would have prevented the
harm that befell GloriFi. See ECF No. 17 at 7–8. A cursory reading of the Complaint reveals several
instances where the Trustee alleges what the Defendants should have done, including parroting
Winston & Strawn’s internal email recommending a course of action. See ECF No. 1 at 10 (alleging

that Winston & Strawn should have advised Mr. Neugebauer on implementing “standard corporate
governance” procedures); see also ECF No. 1 at 13 (highlighting an email from Mr. Chris Ferazzi,
a partner at Winston & Strawn, in which he detailed various steps the firm should have taken prior
to board meeting where Mr. Neugebauer’s proposed transaction was set to be voted on).
In Murillo, the plaintiff alleged that, in relation to an auction of certain HVAC equipment,
the defendants not only knew the equipment had been previously valued at $650,000 as part of a
settlement agreement, but advised the plaintiff to authorize a third party to auction the equipment
for approximately $14,000. Murillo, 2015 WL 1442977 at *6. The plaintiff alleged that the
foreclosure sale of the equipment would have been more profitable had the plaintiff received value

for the equipment substantially closer to its original valuation. Id. at *7. Accordingly, the
defendants’ inadequate advice in counseling the plaintiff to allow the auction to go through was a
proximate cause of the allegedly deficient sale. Id. In its ruling, the District Court for the Northern
District of Texas held that, while it was possible that the plaintiff would be unable to marshal proof
that it could have sold the equipment for a higher price but for the defendants’ advice, or that the
defendants were the proximate cause of the alleged harm, the plaintiff’s allegations with respect
to proximate causation were nevertheless sufficient at the pleading stage. Id. Here, the Court reaches a similar conclusion. While much of the Defendants’ alleged
liability in this case pertains to the failure to act and/or the Defendants’ omission of pertinent
information to GloriFi and the other board members, the Trustee repeatedly alleges that the
Defendants’ failure to act was a conscious decision to prioritize Mr. Neugebauer’s interests over
GloriFi’s. Likewise, the Trustee alleges that the Defendants were made aware of how risky Mr.
Neugebauer’s self-interested proposals were becoming with respect to the Noteholders and their
collective confidence in GloriFi’s ability to close the De-SPAC Transaction. The Defendants were

aware that GloriFi was suffering a governance crisis that was causing a financial crisis, and opted
to do nothing to prevent that alleged financial crisis from occurring before it was too late. ECF No.
1 at 22.
Much like the Murillo court, the Court acknowledges here that the Trustee may very well
be unable to marshal proof that the Defendants were the proximate cause of GloriFi’s inability to
close the De-SPAC Transaction. However, at the motion to dismiss stage, the Complaint contains
numerous allegations that illustrate: (1) the Defendants’ knowledge of an ongoing governance
issue with Mr. Neugebauer; (2) actions contrary to Winston & Strawn’s internally recommended
course of action to reasonably protect GloriFi’s interests; (3) the Defendants’ decision to remain

hands-off during Mr. Neugebauer’s alleged self-dealing and misrepresentations to shareholders;
and (4) such inaction caused the De-SPAC Transaction to fail. In the Court’s mind, such allegations
are more than sufficient.
Therefore, the Court DENIES the Motion to Dismiss with respect to Count I of the
Complaint.
B. Count II—Aiding and Abetting a Breach of Fiduciary Duty
As to Count II, the Court is faced with several issues: (1) whether Texas or Delaware law
applies to the Trustee’s cause of action; (2) whether the Trustee can bring a viable claim for aiding
and abetting Mr. Neugebauer’s breaches of fiduciary duties while alleging that the Defendants
possessed their own fiduciary duties to GloriFi; (3) whether the Trustee plausibly alleged that the
Defendants knowingly participated in Mr. Neugebauer’s alleged breach; and (4) whether the
Trustee’s claim is dependent upon the consummation of the alleged transactions in the Complaint.
i. Which State Law Applies?
As a threshold matter, the parties dispute whether Texas or Delaware law applies to Count

II. The Defendants contend that because the Trustee alleges that the Defendants aided and abetted
a breach of Mr. Neugebauer’s breach of fiduciary duties to GloriFi—a Delaware corporation—any
alleged breach of a fiduciary duty controlled by Delaware law would therefore mean that Delaware
law applies to a claim for aiding and abetting same. ECF No. 8 at 24–25. Conversely, the Trustee
contends that the Defendants are attempting to impermissibly require the Court to determine
whether Delaware law applies to Count II at the Rule 12(b)(6) stage. The Court agrees with the
Defendants that, under the internal affairs doctrine, Delaware law applies.
As noted by the Fifth Circuit, “Texas, like most other states, follows the ‘internal affairs
doctrine,’” in that the internal affairs of a foreign corporation—including but not limited to the

rights, powers, and duties of both its board members and shareholders—are “governed by the laws
of the jurisdiction of incorporation.” Hollis v. Hill, 232 F.3d 460, 464–65 (5th Cir. 2000). The
internal affairs doctrine applies to breach of fiduciary duty claims. See Herington v. Univar Sols.
Inc., Case No. 4:30-CV-3252, 2021 WL 3828702, at *2 (S.D. Tex. May 20, 2021) (applying the
internal affairs doctrine and establishing that Delaware law applies to claim for breach of fiduciary
duty in the motion to dismiss context). Moreover, this Court has previously noted that when a
claim for breach of fiduciary duties is governed by Delaware law, a party’s aiding and abetting
cause of action is also governed by same. See In re Highland Cap. Mgmt., L.P., Case No. 19-
34054-sgj-11, at *34 (Bankr. N.D. Tex. Aug. 25, 2023) (Jernigan, C.J.).
In this matter, the Trustee does not dispute that GloriFi is a Delaware Corporation, nor does
it contest that the alleged breaches of fiduciary duties committed by Mr. Neugebauer arise out of
his fiduciary duties to GloriFi. Accordingly, in alignment with the Court’s previous determinations
on this issue, Delaware law applies to the Trustee’s claim that the Defendants aided and abetted
the fiduciary duties belonging to Mr. Neugebauer. Therefore, the Court evaluates the pleading

sufficiency issues with respect to Count II under Delaware law.
ii. The Defendants’ Separate Fiduciary Duties
Under Delaware law, to bring an aiding and abetting a breach of fiduciary duty cause of
action, a plaintiff must allege: (1) the existence of a fiduciary relationship; (2) a breach of the
fiduciary’s duty; (3) knowing participation in that breach by the defendants; and (4) damages
proximately caused by the breach. See In re DSI Renal Holdings, LLC, 574 B.R. 446, 474 (Bankr.
D. Del. 2017). However, as to the third element, courts applying Delaware law have noted that to
prove such a cause of action, it must be shown that the defendant is not a fiduciary of the plaintiff
themselves. In re W.J. Bradley Mtg. Cap., LLC, 598 B.R. 150, 174 (Bankr. D. Del. 2019).

At bottom, the Defendants’ first primary argument as to the viability of Count II is that,
under Delaware law, an aiding and abetting a breach of fiduciary duty cause of action cannot be
maintained against defendants “who themselves owe fiduciary duties to the relevant entity and
plaintiff.” ECF No. 8 at 24–25; CMS Inv. Holdings, LLC v. Castle, C.A., No. 9468-VCP, 2015 WL
3894021, at *20 (Del. Ch. June 23, 2015). They argue that an aiding and abetting cause of action
under Delaware is only viable against a “party not in [a] direct fiduciary relationship” with the
plaintiff. ECF No. 8 at 25; Gilbert v. El Paso Co., 490 A.2d 1050, 1057 (Del. Ch. 1984). According
to the Defendants, the Trustee readily admits in the Complaint that the Defendants owed their own
fiduciary duties to GloriFi and thus the Trustee’s cause of action under Count II must be dismissed.
ECF No. 8 at 25; see also ECF No. 1 at 2 (“The Trustee seeks to hold Winston Strawn accountable
for the massive financial harm caused by Winston Strawn’s malpractice and intentional breaches
of fiduciary duties.”).
The Trustee counters that Delaware courts have found an exception to the rule, in that
“when the extent or scope of a defendant’s fiduciary duties are disputed, it would be improper at

the motion to dismiss stage to dismiss an alternative claim for aiding and abetting another breach
of fiduciary duty.” ECF No. 15 at 21. Rather, when the scope of a defendant’s fiduciary duties is
disputed, as the Trustee claims the Defendants’ fiduciary duties to GloriFi are, a dismissal on such
basis would prevent the Trustee from raising what is effectively an alternative claim to the
malpractice claim under Count I. Id. at 22. This purported dispute, according to the Trustee, centers
around whether the Defendants possessed fiduciary obligations to take remedial measures and
protect GloriFi’s interests once they knew that Mr. Neugebauer’s self-interest transaction was in
direct violation of his own fiduciary duties to the company. Id. In other words, although the Trustee
alleges that the Defendants had fiduciary duties to GloriFi in some capacity, the Defendants have

disputed whether such duties included taking any further remedial actions, thereby calling the
scope of their fiduciary duties into question.
The Court agrees with the Trustee that, for pleading sufficiency purposes, the Trustee can
bring an aiding and abetting claim under Delaware law because the scope and extent of the
Defendants’ fiduciary duties remain in dispute to some degree. While the court in W.J. Bradley
makes clear that prevailing on an aiding and abetting claim requires proving that the defendant is
a non-fiduciary to the plaintiff, any determination of the “precise boundaries” of a defendant’s
fiduciary duties is ultimately premature at the pleading stage. W.J. Bradley, 598 B.R. at 174. As
the court in DSI held in the context of establishing the scope of fiduciary duties belonging to the
plaintiffs’ directors and officers:
Although the elements of a claim for aiding and abetting a breach of fiduciary duty count
are couched in terms of the primary violator being a fiduciary and the aider and abettor a
non-fiduciary, there is no case law that precludes such a claim against a fiduciary. While a
corporate director owes the corporation fiduciary duties, in some instances those duties
may be limited (by corporate charter or statute). Thus, the Court may find that a director
had no fiduciary duty but aided and abetted a party that did.
DSI, 574 B.R. 446, 474 (quoting In re The Brown Schs., 368 B.R. 394, 402–03 (Bankr. D. Del.
2007)).
In DSI, the court expressly noted that the plaintiff may eventually prove that certain of the
D&O’s were either shielded by exculpatory clauses under their respective contracts and/or that
their fiduciary duties were limited by either the corporation’s governing documents or various
statutes. Id. at 474–75. However, affording all reasonable inferences to the trustee at that particular
stage of the case, the Bankruptcy Court for the District of Delaware ultimately found that the
trustee had adequately pleaded an aiding and abetting a breach of fiduciary duty cause of action
for each of the D&O defendants, notwithstanding the possibility that further discovery might
provide for more precise boundaries as to the scope of the defendants’ fiduciary duties. Id.; see
also W.J. Bradley, 598 B.R. at 174–75 (finding that, despite the possibility that further discovery
may prove that one or more of the defendants either did not have fiduciary duties or that the scope
of same was more limited than originally alleged, the trustee had sufficiently pleaded an aiding
and abetting claim in the alternative).
Here, the Court reaches a similar determination. While the Trustee undoubtedly alleges that
the Defendants owed fiduciary duties to GloriFi via Winston & Strawn’s representation, the outer
limits of those duties are not only ill-defined but disputed by the Defendants. That determination
is premature at this particular stage of the case. Moreover, the Court has some concern that a
lawyer’s fiduciary duties, compared to that of an officer or director, may vary considerably.
Therefore, the Court finds that, under Delaware law, the Trustee may allege an aiding and
abetting a breach of fiduciary duty cause of action despite general allegations of the Defendants
owing their own fiduciary duties to GloriFi.

iii. Knowing Participation
As recently noted by the Court of Chancery of Delaware, a claim for aiding and abetting
“often turns on meeting the ‘knowing participation’ element.” Witmer v. Armistice Cap., LLC, 344
A.3d 632, 659 (Del. Ch. 2025) (citation omitted) (internal quotations omitted). Naturally, the
knowing participation element involves two distinct concepts: (1) knowledge, and (2)
participation. Id. However, the court made clear in Witmer that not only will conclusory statements
“devoid of factual details to support an allegation of knowing participation” fail to meet the
pleading requirements necessary to survive a motion to dismiss under Rule 12(b)(6), but that the
requirement under Delaware law that an aider and abettor “act with scienter” makes an aiding and

abetting claim “among the most difficult to prove.” Id. (citation omitted) (internal quotations
omitted).
As for the “knowing” prong, the court acknowledged in Witmer two distinct types of
knowledge that must be shown: (1) the defendant’s knowledge that the primary party’s conduct
constitutes a breach of their own fiduciary duty; and (2) the defendant must know the impropriety
of its own conduct. Id. at 660. Put simply, the defendant must know of the alleged breach, as well
as the wrongfulness of its own conduct. Id. As for the “participation” prong, the court reiterated in Witmer that participation requires
that the defendant provided “substantial assistance” to the primary violator. Id. (quoting In re
Mindbody, Inc., Stockholder Litig., 332 A.3d 349, 392 (Del. 2024)) (internal quotations omitted).
An alleged aider and abettor’s participation must also be of an “active nature” rather than mere
“passive awareness.” Witmer, 344 A.3d at 660–61 (citation omitted) (internal quotations omitted).
In Mindbody, the Supreme Court of Delaware acknowledged that, especially in the corporate
governance context, liability for aiding and abetting was found “only where there has been overt

participation such as active ‘attempts to create or exploit conflicts of interest in the board’ or an
overt conspiracy or agreement” between particular parties with respect to a transaction affecting
the underlying organization. Mindbody, 332 A.3d at 393.
In Witmer, the court was faced with allegations by a stockholder plaintiff that the defendant
had intimate knowledge regarding proposed financial transactions pursued by a related
organization’s board of directors, yet the defendant chose to withhold this information to the
detriment of the organization. Witmer, 344 A.3d at 641–43. Despite having the requisite knowledge
that the organization’s board of directors would likely breach its fiduciary duties in finalizing the
transactions and remaining silent as to same, the defendant, according to the court, had not actively

participated in the board’s breach and the plaintiff had not pleaded that the defendant “created an
informational vacuum or misled [the organization’s] board in any way.” Id. at 661; see also In re
Rural Metro Corp., 88 A.3d 54, 99–100 (Del. Ch. 2014) (holding that an aiding and abetting claim
can survive a motion to dismiss if the plaintiff can sufficiently allege that the defendant “created
the unreasonable process and information gaps” that led to the primary violator’s breach of the
duty of care through either misdirection or improper motives).
Here, the Defendants argue that, despite numerous allegations of the Defendants’ failures
to warn GloriFi’s board members of the implications of Mr. Neugebauer’s self-interested
transactions, as well as their choice to stay silent while GloriFi’s apparent governance and financial
crises threatened to derail the De-SPAC Transaction, the Trustee has still failed to sufficiently plead
that the Defendants knowingly participated in Mr. Neugebauer’s alleged breaches of fiduciary
duties. According to the Defendants, the Trustee’s assertions of knowing participation and
assistance in Mr. Neugebauer’s breaches are merely conclusory, and the Trustee fails to articulate
the scienter behind the alleged aiding and abetting. ECF No. 8. The Trustee counters this argument

by contending that numerous internal emails illustrate that the Defendants knew about Mr.
Neugebauer’s improper behavior via self-interested proposals and alleged misrepresentations to
GloriFi’s board and shareholders. ECF No. 15 at 26. Likewise, the Trustee alleges that the
Defendants were active participants in such breaches. Id. While admittedly a close call, the Court ultimately sides with the Trustee that Count II
sufficiently alleges knowing participation in Mr. Neugebauer’s alleged breaches of fiduciary
duties. Although much of the Complaint contains what are arguably conclusory statements that the
Defendants were active participants in Mr. Neugebauer’s actions, the Defendants undersell the
Trustee’s substantive allegations underlying his conclusions. First, it is without question that the

Trustee has sufficiently pleaded the knowledge prong of “knowing participation.” Throughout the
Complaint, the Trustee alleges that the Defendants were aware of the improper nature of Mr.
Neugebauer’s proposals and/or his alleged misrepresentations to shareholders, and the ensuing
confusion and concern from both GloriFi’s board members and the Noteholders. Moreover, the
Trustee includes multiple email exchanges, both internally within Winston & Strawn and
externally between the Defendants and Mr. Neugebauer, Mr. Ayers, and Ms. Findley, respectively.
For pleading purposes, notwithstanding the stricter standards that Delaware courts have imposed
upon pleading an aiding and abetting cause of action, the quantity and quality of the Trustee’s
allegations are more than sufficient for this prong.
As for the participation prong, the determination is much closer. However, the Court is
satisfied with the Trustee’s allegations as to the Defendants’ active participation in two respects.
First, the Trustee specifically alleges that Winston & Strawn sent out letters of consent to GloriFi’s
shareholders, which allegedly contained misrepresentations regarding the details of Mr.
Neugebauer’s proposed transactions. ECF No. 1 at 16–17. The Trustee further alleges that Mr.

Ayers emailed Mr. Blankenship directly to note that the term sheet included in the consent letters
was misleading, at best, in relation to Mr. Neugebauer’s actual proposals. Id. at 17. Second, the
Court also finds the Trustee’s allegations related to the Defendants’ negotiation of the terms of Mr.
Neugebauer’s proposal are also sufficient to allege participation in Mr. Neugebauer’s breach. The
Trustee specifically alleges that Winston & Strawn suggested that the proposed note’s choice of
law provision contain New York law to “make the terms more favorable” to Mr. Neugebauer
despite representing GloriFi. Id. at 14–15. Furthermore, the Trustee alleges that the Defendants
avoided involving Mr. Ayers and Ms. Findley in the negotiation process, despite the self-interested
nature of Mr. Neugebauer’s proposal. Id. at 14.

While the Complaint, at times, contains conclusory language that courts like Witmer and
Rural Metro chastise, the above-mentioned allegations are sufficient in the Court’s mind for
purposes of establishing “knowing participation.” Here, the Trustee plausibly alleged that the
Defendants either “misled” or, at the very least, created the “unreasonable process and information
gaps” with respect to GloriFi’s board and its shareholders’ abilities to properly assess the legality
of Mr. Neugebauer’s proposals. As well, the Trustee plausibly alleged that the Defendants
participated in negotiating portions of Mr. Neugebauer’s proposals and “went out of [their] way”
to make the terms of Mr. Neugebauer’s proposed transaction more favorable to him and to
GloriFi’s detriment. Id. At this stage in the case, such allegations are more than enough to survive
a Rule 12(b)(6) motion under Delaware law.
iv. Consummation of the Proposed Transactions
The Defendants’ final argument with respect to Count II is that the Trustee’s cause of action
is not viable because, “Delaware does not recognize a claim for breach of fiduciary duty based on

attempted but not consummated self-dealing transactions.” ECF No. 8 at 25 (citing Niehenke v.
Right O Way Transp., Inc., Civ. Action No. 14392, 14444, 1996 WL 74724, at *2–3 (Del. Ch. Feb.
13, 1996)). In other words, given that the Trustee alleges that Mr. Neugebauer’s self-interested
transactions were only proposed and never finalized, the Court must dispose of the Trustee’s cause
of action. Id. at 26.
The Trustee responds that the Defendants miss the underlying premise of the Trustee’s
claim: rather than this matter being a dispute about “attempted bad deals”, the crux of the matter
is that the Defendants’ knowing participation in Mr. Neugebauer’s self-dealing caused a
governance crisis resulting in a financial crisis at GloriFi. ECF No. 15 at 22. Moreover, the Trustee

argues that, under Delaware law, courts have “distinguished between damages resulting
specifically from [a] challenged transaction and other damages stemming from a breach of
fiduciary duty,” and that those courts have ultimately held that damages for the latter are
recoverable “even where one or more of the fiduciary’s intended self-dealing transactions fail.” Id. at 22–23 (quoting OTK Assocs., LLC v. Friedman, 85 A.3d 696, 716 (Del. Ch. 2014)) (internal
quotations omitted).
The Court agrees with the Trustee that, at the pleading stage, the Defendants’ emphasis on
the completion, or lack thereof, of Mr. Neugebauer’s self-interested proposals is a
misunderstanding of the allegations underlying Count II. At bottom, the Trustee pleads that Mr.
Neugebauer owed various fiduciary duties to GloriFi as a board member and CEO, and that he
allegedly violated those duties by actively proposing self-interested transactions, improperly
participating in a vote to approve one of those transactions, and misrepresenting the nature of his
proposals to shareholders. The Trustee pleads that the Defendants actively facilitated Mr.
Neugebauer’s actions, which not only disrupted GloriFi from a governance perspective, but

eventually caused the De-SPAC Transaction to fail. Such allegations revolve around Mr.
Neugebauer’s actions as a governing member of the organization, and their sufficiency is not
dependent upon the success of the proposed transactions themselves.
For a defendant to be liable for aiding and abetting, the alleged aider and abettor must
“knowingly assist another in committing a wrongful act.” New Ent. Assocs. 14, L.P. v. Rich, 292
A.3d 112, 176 (Del. Ch. 2023). Here, the Defendants incorrectly presume that the wrongful act
allegedly committed by Mr. Neugebauer must be the completion of a self-interested transaction.
However, the alleged wrongful acts in the Complaint pertain to Mr. Neugebauer’s alleged
disruption of the De-SPAC Transaction process, his attempts to disrupt proper corporate

governance, and the subsequent damage Mr. Neugebauer caused through his pursuit of the
transactions in the first place. In sum, the Trustee alleges that Mr. Neugebauer sowed chaos at
GloriFi and the Defendants aided and abetted him.
Furthermore, the cases relied upon by the Defendants do not necessarily support their novel
legal position. In Niehenke, the court refused to find a defendant liable for breach of fiduciary duty
primarily because the defendant merely solicited the transaction in questions but never actually
executed the wrongful act. Niehenke, 1996 WL 74724 at *2. Notwithstanding that the case
involved a post-trial motion for rehearing rather than a motion to dismiss, the wrongful act and the
damages in dispute before the Niehenke court were specifically tied to the “unexecuted requests of
an officer, spoken with uncertain intent” and the alleged harm to shareholders due to the officer’s
solicitations. Id. Here, even if the Court were to set aside the fact that Mr. Neugebauer’s written
proposals, as alleged, were anything but uncertain in terms of intent, the premise underlying the
Complaint is that he breached his fiduciary duties through unilateral actions and
misrepresentations to further his financial position in GloriFi, and that the Defendants were active

participants in that process. The damage suffered by GloriFi is alleged to stem from those actions
and their effect on the prospect of finalizing the De-SPAC Transaction. None of that damage is
contingent upon Mr. Neugebauer having finalized his proposed transaction; the harm to GloriFi,
according to the Trustee, was already done.
The Court also finds that the Defendants’ argument is concerning from a practical
perspective. In essence, the Defendants’ premise is results-oriented; a breach of fiduciary duty is
only actionable under Delaware law if the defendant successfully completes a particular act they
set out to commit. While that may make sense under certain circumstances (for example, the
unauthorized sale of an asset that is not consummated), such a broad-brush rule swallows what

constitutes a breach of fiduciary duty altogether. The Defendants would have this Court hold that,
so long as Mr. Neugebauer’s final breach (the self-interested transactions and/or the note) never
materializes, his other alleged breaches effectively do not count for liability purposes and therefore
the Defendants cannot be liable either. That is a proposition this Court cannot adopt. For pleading
purposes, fully consummating an unlawful transaction cannot be the sole determining factor for
liability, especially when the means for achieving consummation are plausibly alleged as improper
acts as well.
Therefore, the Court DENIES the Motion to Dismiss with respect to Count II.
C. Counts III & IV—Constructive Fraudulent Transfer
The sole issue before the Court with respect to Counts III and IV, and thus the viability of
Counts V and VI, is whether the Trustee has plausibly alleged that GloriFi received less than
reasonably equivalent value from Winston & Strawn with respect to the legal services performed
in exchange for GloriFi paying Winston & Strawn approximately $790,890.
To establish a cause of action under either § 548 or TUFTA for constructive fraudulent

transfer, the trustee “must demonstrate that the debtor received less than reasonably equivalent
value in exchange for such transfer or obligation.” In re Hanover Corp., 310 F.3d 796, 799 (5th
Cir. 2002) (quoting 11 U.S.C. § 548 (a)(1)(B)(i)). As previously noted by this Court, “Reasonably
equivalent value is not defined in the [Bankruptcy] Code.” In re With Purpose, Inc., Case No. 23-
30246, Adv. Proc. No. 24-3038, 2025 WL 1698694 at *21 (Bankr. N.D. Tex. June 16, 2025)
(Larson, J.). However, § 24.004(d) of TUFTA defines “Reasonably Equivalent Value” to include,
without limitation, “a transfer or obligation that is within the range of values for which the
transferor would have sold the assets in an arm’s length transaction.” Tex. Bus. & Comm. Code §
24.004(d).

Although the definition of reasonably equivalent value may be conceptual, both the
Bankruptcy Code and TUFTA provide that “‘value’ includes, but is not limited to, the satisfaction
of an antecedent debt of the debtor.” In re Senior Care Ctrs., LLC, Case No. 18-33967, Adv. Proc.
No. 20-03182, 2023 WL 6519756, at *12 (Bankr. N.D. Tex. Mar. 24, 2023) (Jernigan, C.J.); see
also 11 U.S.C. § 548 (d)(2)(A) (“‘[V]alue’ means property, or satisfaction or securing of a present
or antecedent debt of the debtor, but does not include an unperformed promise to furnish support
to the debtor or to a relative of the debtor.”); Tex. Bus. & Comm. Code § 24.004(a) (“Value is
given for a transfer . . . if, in exchange for the transfer . . . an antecedent debt is secured or satisfied
. . . .”). Accordingly, under Fifth Circuit precedent, for “reasonably equivalent value” to be present,
the debtor must have “received value that is substantially comparable to the worth of the
transferred property.” Stanley v. U.S. Bank Nat’l Ass’n. (In re TransTexas Gas Corp.), 597 F.3d
298, 306 (5th Cir. 2010) (citation omitted) (internal quotations omitted).
The burden for showing a lack reasonably equivalent value “falls on the [t]rustee—the
party seeking to avoid the [t]ransfer as a constructively fraudulent conveyance.” Senior Care

Centers, 2023 WL 6519756 at *14. The Supreme Court of Texas has held that both “value” and
“reasonably equivalent value” contain an “implicit requirement that the transfer confer some direct
or indirect economic benefit to the debtor, as opposed to benefits conferred solely on a third party,
transfers that are purely gratuitous and transactions that merely hold subjective value to the debtor
or transferee.” Id.; Janvey v. Golf Channel, Inc., 487 S.W.3d 560, 574 (Tex. 2016) (emphasis in
original). It is therefore a trustee’s burden to show that a debtor “did not receive a direct or indirect
benefit” in exchange for the transfers at issue. Senior Care Centers, 2023 WL 6519756 at *14.;
Janvey v. Golf Channel, Inc., 487 S.W.3d 560, 574 (Tex. 2016). Finally, a court’s determination of
what constitutes “reasonably equivalent value” must be made “as of the time of the transfer,

without the benefit of hindsight as to what actually transpired after the transfer that might have
affected the value.” In re Topcor Inc., 54 Fed. App’x 405 (5th Cir. 2002).
Here, the Court need not wax poetic on the merits of the parties’ respective arguments on
this issue because the the Trustee’s allegations with respect to reasonably equivalent value are
plainly insufficient. Put simply, there are no allegations in the Complaint that even attempt to
explain how the legal services provided by Winston & Strawn lacked reasonably equivalent value,
or how the Debtor did not receive a direct or indirect benefit from the alleged transfers. Rather, the
Complaint merely states that GloriFi “obviously did not receive reasonable equivalent value” and
the Trustee broadly gestures at the remaining allegations as support for that claim. Such a
contention is purely conclusory, and while the notice pleading requirements under Rule 8 are
undoubtedly lenient, they are not amorphous. The “obviousness” of an allegation’s plausibility is
only as strong as the effort the plaintiff puts forth in actually pleading as much. A plaintiff’s claims
cannot survive purely on their choice in adverbs.
Therefore, the Court will GRANT the Motion to Dismiss with respect to Counts III and

IV, and thus will GRANT the Motion with respect to Counts V and VI as well, without prejudice,
and will permit the Trustee to re-plead these particular causes of action.
VI. CONCLUSION
For the reasons set forth above, it is hereby
ORDERED that the Defendants’ Motion to Dismiss is DENIED with respect to Counts I
and II of the Complaint; it is hereby
ORDERED that the Defendants’ Motion to Dismiss is GRANTED with respect to Counts
III, IV, V, and VI; and it is hereby
ORDERED that, given the Trustee’s request seeking leave to amend any causes of action

dismissed by the Court, the Trustee will be permitted to amend the Complaint and file same within
thirty (30) days of entry of this Order.
### END OF ORDER ###