Case Explained: In the Matter of With Purpose, Incorporated Debtor James N. Ayers; the J. Nicholas Ayers 2021 Irrevocable Trust; Ayers Family Holdings, L.L.C v. Toby Neugebauer

Court: United States Court of Appeals for the Fifth Circuit

Filed: 2026-07-16

The Fifth Circuit affirmed the lower courts’ judgment holding that the Ayers parties willfully violated the automatic stay under 11 U.S.C. § 362 by continuing to pursue a deposition of Toby Neugebauer in arbitration after With Purpose, Inc. filed for Chapter 7 bankruptcy. The court held that Neugebauer has standing to enforce the stay and recover damages because he is a creditor and an “individual injured” by the violation under 11 U.S.C. § 362(k), noting that the breach-of-fiduciary-duty claim pursued against him constituted property of the bankruptcy estate. Applying de novo review for legal questions and clear error review for factual findings, the court determined that the Ayers parties knew of the stay and intentionally took actions to exercise control over estate property, satisfying the willfulness standard established in *Campbell v. Countrywide Home Loans, Inc.*. Regarding the damages award, the court clarified that attorney’s fees mandated by § 362(k) must be reviewed for clear error rather than abuse of discretion, concluding that the bankruptcy court did not clearly err in including fees incurred to stay the arbitration and related state-court proceedings as actual damages. Consequently, the judgment awarding Neugebauer actual damages and attorney’s fees remains in effect.

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