Court Opinion

ID: 8212690
Source: CourtListenerOpinion
Date Created: 2022-10-07 18:00:19.415779+00
Date Added: 2024-06-11T16:42:12.674992
License: Public Domain

Case: 20-10908    Document: 00516500711        Page: 1   Date Filed: 10/07/2022

          United States Court of Appeals
               for the Fifth Circuit
                                                                    United States Court of Appeals
                                                                             Fifth Circuit

                                                                           FILED
                                                                     October 7, 2022
                                No. 20-10908                          Lyle W. Cayce
                                                                           Clerk

   In the Matter of: EVERGREEN HELICOPTERS
   INTERNATIONAL INCORPORATED

                                                                    Debtor,

   Robert E. Ogle, Solely in his Capacity As Litigation
   Trustee for the Erickson Litigation Trust,

                                                                 Appellant,

                                    versus

   Quinn Morgan; Kenneth Lau; Udo Rieder; Centre Lane
   Partners, L.L.C.; 10th Lane Finance Company, L.L.C.;
   10th Lane Partners, L.P.; ZM Private Equity Fund I, L.P.;
   ZM Private Equity Fund II, L.P.; ZM EAC, L.L.C.,

                                                                  Appellees.

                 Appeal from the United States District Court
                     for the Northern District of Texas
                          USDC No. 3:19-CV-1838
Case: 20-10908         Document: 00516500711              Page: 2       Date Filed: 10/07/2022

                                          No. 20-10908

   Before Jones and Southwick, Circuit Judges. 1
   Edith H. Jones, Circuit Judge:
             Robert Ogle, in his capacity as Litigation Trustee for the Erickson
   Litigation Trust, appeals dismissal of his avoidance and recovery claims
   under the bankruptcy laws. In broad terms, these claims seek avoidance of
   settlement releases approved in Delaware state court, as well as two
   payments related to Erickson Air-Crane, Inc.’s acquisition of Evergreen
   Helicopters, Inc. (EHI) (the “Evergreen Transaction”).                      After careful
   consideration of the record and relevant legal authorities, we AFFIRM
   dismissal of the claims relating to the settlement releases and REVERSE IN
   PART the dismissal of the payments relating to the Evergreen Transaction
   itself.
                                 I.       BACKGROUND
             Ogle’s avoidance claims turn on two factual events: The Evergreen
   Transaction and a subsequent settlement agreement resolving direct and
   derivative claims brought by shareholders related to that transaction. 2 We
   describe each in turn before discussing the procedural history.
             1.    The Evergreen Transaction
             In May 2013, Erickson purchased EHI from Evergreen International
   Aviation, Inc. (“EIA”) for $250 million. The purchase price included a

             1
            Judge Gregg Costa was a member of the panel that heard this case but resigned
   from the court before it was decided. This case is decided by a quorum under 28 U.S.C.
   § 46(d).
             2
              The facts as described herein are taken principally from Ogle’s complaint because
   this appeal arises from a motion to dismiss and, thus, well-pleaded facts in the complaint
   must be taken as true. De La Paz v. Coy, 786 F.3d 367, 371 (5th Cir. 2015) (“On appeal
   from a motion to dismiss, this court accepts all well-pleaded facts as true and views them
   in the light most favorable to the plaintiff.” (citation omitted)). Appellees sharply contest
   several facts, including Ogle’s characterization of the transaction, and nothing in this
   section should be construed as deciding any factual dispute.

                                                2
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                                       No. 20-10908

   sizeable cash component of $185 million, along with                 a $17.5 million
   unsecured promissory note, and convertible preferred stock valued at $47.5
   million. The complaint alleges Erickson was “cash poor” with less than $1.5
   million in “cash and cash equivalents.” Thus, Erickson obtained “crippling
   debt financing” to purchase EHI that set it “on an inevitable path to financial
   ruin.” Further—and of particular importance to this appeal—in addition to
   using this debt financing as consideration for the purchase of EHI, Erickson
   used it to provide “early payment” on $27.5 million of “unsecured
   obligations” to ZM Entities. 3
          The complaint alleges at length that Erickson’s decision to purchase
   EHI was the result of deceptive conduct by two conflicted board members,
   Quinn Morgan and Kenneth Lau, along with Erickson’s CEO Udo Rieder. It
   is replete with allegations that they “breached their fiduciary duties in
   causing Erickson to acquire EHI at an inflated price and to incur crippling
   debt to do so.” The alleged scheme involved a tangled web of interrelated
   entities. First, ZM Entities owned a controlling 61% share of Erickson around
   the relevant time period. Second, Morgan and Lau “controlled” a “private
   equity firm” called Centre Lane Partners that was “affiliated with” ZM
   Entities. Third, Morgan and Lau possessed “de facto control” of ZM
   Entities and used it to install themselves and Rieder on Erickson’s board of
   directors.
          The complaint alleges that the Defendants’ principal motivation in
   causing Erickson to acquire EHI was to salvage value from debt that ZM
   Entities owned pertaining to EHI’s parent company, EIA. In short, ZM
   Entities held approximately $60 million in second-lien debt owed by EIA.

          3
           Both parties agree the relevant ZM entities are ZM Private Equity Fund I, L.P.;
   ZM Private Equity Fund II, L.P.; ZM EAC LLC; and 10th Lane Finance Co., LLC.

                                             3
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   Because EHI (a wholly-owned subsidiary of EIA) was in “severe financial
   distress” as evidenced by a negative Standard & Poor’s recovery rating, the
   complaint contends the second-lien debt held by ZM Entities was “nearly
   worthless.”
          Thus, Erickson’s purchase of EHI functioned as “the perfect bailout
   vehicle” for ZM Entities, allowing them to avoid “a significant risk of loss in
   connection with their holdings of approximately $60 million in second lien
   debt” at Erickson’s expense. The complaint alleges at least two specific
   benefits that ZM Entities received from the acquisition. 4 First, it received
   preferred shares in Erickson valued at $32.9 million “as repayment of their
   pro rata share of principal of the EIA Second Lien Credit Facility.” Second,
   as already stated, ZM Entities reduced their “debt exposure” to Erickson by
   receiving $27.5 million in “early payment of outstanding unsecured
   obligations purportedly owed by Erickson,” which constituted a “substantial
   return” on the subordinated notes “while leaving Erickson’s other creditors
   to serve as bag holders of the newly undercapitalized company.” The
   complaint alleges that ZM Entities subsequently attempted to “unload their
   entire position in now-undercapitalized Erickson” by selling its shares as
   evidenced by a filed S-3 registration statement. This “exit strategy” was
   unsuccessful only after financial website Seeking Alpha published an article
   titled “Massive Insider Deal Threatens Erickson Air-Crane.”
          In short, Ogle’s complaint alleges: (1) the Evergreen Transaction was
   a bad deal for Erickson; (2) it was pushed forward by conflicted board
   members and Center Lane, who “misled” Erickson’s “independent Board
   of Directors”; (3) the debt incurred to facilitate the acquisition “set Erickson

          4
           Center Lane received $2.5 million in fees for its work on the EHI acquisition,
   which Ogle also seeks to avoid under the bankruptcy laws.

                                             4
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   on an inevitable path to financial ruin” that the Defendants “knew or should
   have known . . . posed a substantial risk of bankruptcy for Erickson”; and
   (4) the Defendants attempted to leave other creditors as “bag holders” of
   Erickson debt by obtaining early payment on their debt and attempting to
   unload their position in Erickson.
          2.     The Settlement
          In 2013, shareholders brought a class action and derivative suit—
   alleging, inter alia, breach of fiduciary duties and unjust enrichment—in
   Delaware state court. The suit implicated the same basic facts described
   above, and the Defendants in the present case were also defendants in the
   Delaware suit. In January 2016, the parties, with the assistance of an
   experienced mediator, reached an agreement in principle to settle.
   Erickson’s board and its counsel certified that the settlement was “fair,
   reasonable, adequate, and in the best interests of [Erickson] and its
   stockholders.” Pursuant to Delaware law, the state court held a fairness
   hearing to determine whether to approve the settlement.            The court
   approved the settlement and concluded that the terms were “fair,
   reasonable, and adequate, and in the best interests of Plaintiff, the Class and
   [Erickson].” In September 2016, the court entered an order approving the
   settlement.
          Two aspects of the settlement are particularly important for present
   purposes. First, the financial component provided for a total payment of
   $18.5 million consisting of (a) $2,833,747 to Erickson (20% after fees and
   expenses) and (b) $11,334,989 to the Erickson stockholder class (80% after

                                         5
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                                          No. 20-10908

   fees and expenses). Second, the settlement required a full release of claims
   against the Defendants. 5
           The complaint criticizes both components. It contends the 80/20
   division was inappropriate because the “value of Erickson’s claims against
   the Defendants greatly exceeded the $2.8 million the company received for
   settling those claims.” And it alleges that the releases were “part of a
   nefarious, unspoken quid pro quo through which: (a) the Defendants were
   able to obtain releases in exchange for (b) giving Erickson’s shareholders a
   windfall that they would not have received if Erickson had filed for
   bankruptcy.”
           3.      Procedural History
           In November 2016, Erickson filed for Chapter 11 bankruptcy. The
   filing occurred about three and a half years after the Evergreen transaction
   and only two months after the derivative action settlement. A litigation trust
   was created pursuant to the reorganization plan, which transferred to the
   trustee, Ogle, the right to assert these claims. Ogle’s suit asserted twelve
   counts for avoidance and recovery of various payments and releases on behalf
   of Erickson creditors.          Specifically, the twelve counts fall into three
   categories:
           1. Avoidance and recovery of the shareholder derivative releases to
              Morgan, Lau, Rieder, and Center Lane as actual or constructive
              fraudulent transfers under 11 U.S.C. §§ 544, 548, and 550 (Counts
              6–11).

           5
              The release was broadly worded to include “any and all Claims that are based
   upon, arise out of, relate in any way to, or involve (in whole or in part) any of the facts
   alleged in the Action, . . . including any and all Claims which are based upon, arise out of,
   relate in any way to, or involve, directly or indirectly . . . the Evergreen Transaction.”

                                                6
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           2. Avoidance and recovery, under §§ 544(b) and 550, of payments
              made in connection with the Evergreen Transaction: Erickson’s
              $27.5 million payment to ZM Entities (Counts 1 and 4); and $2.5
              million transaction fee to Center Lane vis-à-vis 10th Lane Part-
              ners, LP (Counts 2, 3 and 5).
           3. Objection to claims of the ZM Entities in Erickson’s Chapter 11
              case under § 502(d) (Count 12). 6
           The bankruptcy court granted Defendants’ motion to dismiss the suit.
   Regarding the claims attacking the settlement releases (Counts 6–11), the
   court concluded that the constructive fraud claims ran afoul of the Rooker-
   Feldman doctrine because they amounted to an attack on the state court
   judgment. Alternatively, it concluded principles of preclusion or this court’s
   decisions in Besing and Erlewine supported dismissal on the merits. See In re
   Besing, 981 F.2d 1488 (5th Cir. 1993); In re Erlewine, 349 F.3d 205 (5th Cir.
   2003). As for the actual fraud claims attacking the releases, the court
   concluded that the complaint failed to satisfy a heightened pleading standard
   for fraud.
           Finally, regarding the claims challenging payments that were part of
   the Evergreen Transaction itself (Counts 1–5), the bankruptcy court
   concluded that Ogle could not assert these claims because the Delaware
   judgment “enjoined Erickson’s successors and assignees from prosecuting
   any causes of action relating to the Evergreen transaction.”
           The district court affirmed on each count for the reasons stated in the
   bankruptcy court’s order and oral ruling. Additionally, it fleshed out Besing’s
   applicability and concluded that precedent barred the “constructive

           6
             As both parties recognize, this claim depends on the others and, thus, does not
   require an independent analysis.

                                              7
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                                            No. 20-10908

   fraudulent transfer claims related to the Delaware Judgment.” Ogle timely
   appealed.
                                    II.      DISCUSSION
           “On appeal, this court reviews the bankruptcy court’s judgment by
   the same standards that guided the district court scrutinizing the same
   judgment in its appellate capacity. Findings of fact are reviewed for clear
   error and conclusions of law de novo.” 7                     In re Texas Com. Energy,
   607 F.3d 153, 158 (5th Cir. 2010) (citation omitted).
           The claims we must review are the first two sets identified above:
   Those attacking releases in the Delaware settlement and others seeking
   avoidance of two payments related to the Evergreen Transaction. We
   address each in turn.
   A.      The Delaware Releases
           For the following reasons, we affirm the bankruptcy court’s dismissal
   of the constructive fraud (Counts 7 and 9) and actual fraud (Counts 6 and 8)
   claims related to the Delaware settlement.
           1.       Constructive Fraud
           The lower courts correctly concluded that the principles set forth in
   Besing and Erlewine favor dismissal of Ogle’s constructive fraud claims

           7
              The record is not precise regarding the exact basis in the Federal Rules of Civil or
   Bankruptcy Procedure for the lower court’s analysis. Our resolution, however, derives
   from Rule 12(b)(6), incorporated under Bankruptcy Rule 7012(b), and considers whether
   Ogle’s complaint “contain[s] sufficient factual matter, accepted as true, to ‘state a claim
   to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937,
   1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1973
   (2007)).

                                                  8
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                                          No. 20-10908

   (Counts 7 and 9). 8 Following those cases, we hold that the Delaware court’s
   judgment approving the relevant settlement agreement after a fairness
   hearing established reasonably equivalent value for the Delaware releases as
   a matter of law.
           To avoid a transfer as constructively fraudulent Ogle must allege facts
   showing, inter alia, that the debtor (Erickson) “received less than a
   reasonably equivalent value in exchange for such transfer or obligation.” 9
   11 U.S.C. § 548(a)(B)(i). While this “inquiry is ordinarily fact-intensive,” a
   “[state] court’s disposition of the Debtors’ claims” can “constitute[] a
   transfer for reasonably equivalent value as a matter of law.” 10 Besing,
   981 F.2d at 1494–96; see Erlewine, 349 F.3d at 213 (affirming a bankruptcy
   court’s “finding that the Debtor received reasonably equivalent value as a

           8
              Like Erlewine, we conclude the Rooker-Feldman doctrine does not deprive this
   court of jurisdiction, nor does res judicata preclude the relevant claims. See Erlewine,
   349 F.3d at 209–10 (recognizing Rooker-Feldman “generally should not extend to state
   decisions that would not be given preclusive effect under doctrines of res judicata and
   collateral estoppel,” and concluding res judicata and collateral estoppel did not apply
   because the trustee also represented the interests of creditors that were “not represented
   in the [state court] action”). Thus, we affirm the bankruptcy court based on its alternative
   holding grounded in Besing and Erlewine.
           9
             Besing and Erlewine both “rested on an interpretation of the phrase ‘reasonably
   equivalent value’ in § 548.” Erlewine, 349 F.3d at 211. The claims in Besing were for breach
   of contract and tort, and the state court’s dismissal of those claims with prejudice as a
   sanction for discovery abuse “effectively appraised” the claims “as valueless.” Erlewine,
   349 F.3d at 211 (summarizing Besing); see Besing, 981 F.2d at 1496. In Erlewine, the relevant
   state court judgment was a divorce decree dividing community assets “unevenly” between
   the divorcing parties, of which the debtor’s portion was deemed “reasonably equivalent
   value as a matter of law.” 349 F.3d at 212–13.
           10
              As we recognized in Erlewine, this approach “draws modest support” from BFP
   v. Resolution Trust Corp., 511 U.S. 531, 114 S. Ct. 1757 (1994), where the Supreme Court
   “held that the price received at a mortgage foreclosure sale conclusively satisfies the
   reasonable equivalence test as long as the sale was non-collusive and conducted in
   conformity with state law.” 349 F.3d at 212.

                                                9
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                                        No. 20-10908

   matter of law” based on a state court judgment). Significantly, Erlewine
   emphasized the importance of the state court proceedings being fully
   litigated and without evidence of collusion, sandbagging, or any irregularity
   before finding reasonably equivalent value. See Erlewine, 349 F.3d at 212–13
   (concluding that “the Debtor received reasonably equivalent value as a
   matter of law,” and emphasizing that the case “was fully litigated, without
   any suggestion of collusion, sandbagging, or indeed any irregularity”).
           The Delaware judgment approving the settlement established
   reasonably equivalent value for the releases as a matter of law. Critically, the
   Delaware court was not a passive participant in the settlement process;
   instead, its “function” was to “consider the nature of the plaintiff’s claim,
   the possible defenses thereto, the legal and factual circumstances of the case,
   and then to apply its own business judgment in deciding whether the
   settlement is reasonable in light of these factors.” 11 Prezant v. De Angeles,
   636 A.2d 915, 921 (Del. 1994) (citations omitted). And the court did just that,
   holding a fairness hearing that considered “the merits of the settlement,”
   and concluding this settlement fell “within a range of reasonableness” that it
   considered “the gravamen” of the relevant analysis. In its subsequent order
   and final judgment, the Delaware court concluded that the terms of the
   settlement were “fair, reasonable, and adequate, and in the best interests of
   Plaintiff, the Class and [Erickson].”
           Nor was there any indication whatsoever of collusion, sandbagging, or
   other irregularity in the proceedings before the Delaware court. Ogle does

           11
              See also Barkan v. Amsted Indus., Inc., 567 A.2d 1279, 1283 (Del. 1989)
   (recognizing the “special role” that the Court of Chancery plays “when asked to approve
   the settlement of a class or derivative action,” and that it “must carefully consider all
   challenges to the fairness of the settlement but without actually trying the issues
   presented” while exercising its “considerable discretion”).

                                              10
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                                         No. 20-10908

   not allege facts to support a finding, for example, that the settling parties
   entered into a collusive settlement where material facts were concealed from
   the state court to obtain its approval. Quite the contrary, Ogle recognizes
   that the settlement was the result of meaningful negotiation between the
   settling parties and even quotes excerpts from the Delaware hearing to that
   effect. For instance, in the fairness hearing counsel told the Delaware court
   that “the settlement amount was the product of negotiations by the parties”
   aided by “an assessment of the case by an experienced and highly respected
   mediator after the parties were unable to agree on a number.” Further, the
   mediator “endorsed the reasonableness of the settlement amount.” Indeed,
   “the settlement very nearly cratered” over allocation of the settlement
   proceeds; and the parties “fought very, very hard” over the division of the
   proceeds.
           Ogle’s efforts to distinguish Besing and Erlewine give us no pause.
   First, nothing in those cases supports limiting them to involuntary judicial
   transfers as Ogle suggests. Rather, Erlewine emphasizes the importance of
   the judicial transfer being of an economic nature, stating that the judicial
   property division in that case “was above all an economic transaction, albeit
   an involuntary one.” 349 F.3d at 212 (emphasis added). The settlement
   here, too, was an economic transaction vigorously negotiated by the parties
   and independently evaluated for fairness by a mediator and the Delaware
   court. Second, this court’s consideration of the Delaware judgment does not
   amount to taking improper judicial notice of the factual findings of another
   court. 12 Quite the opposite. Like Besing, we decline to “look behind” the

           12
              Ogle relies primarily on an out-of-circuit case in a different context to support
   this argument. See Gen. Elec. Cap. Corp. v. Lease Resol. Corp., 128 F.3d 1074, 1082–83 (7th
   Cir. 1997). But Besing and Erlewine are factually on-point and precedential decisions this
   panel is bound to follow under the rule of orderliness.

                                               11
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   Delaware judgment to “make an independent evaluation of the claims on
   their merits.” 981 F.2d at 1496. Recognizing the existence and parameters
   of a state court judgment hardly constitutes improper judicial notice, and that
   is precisely what this court did in Besing and Erlewine. Alternatively, Ogle
   urges this court to distinguish Besing on the facts by looking to the
   “circumstances” around the Delaware judgment and “significant factual
   issues [that] remain regarding reasonably equivalent value.” To do so would
   be to look behind the Delaware judgment and independently assess its merits,
   an invitation we have declined. And Ogle has not alleged irregularities or
   special circumstances that would require reconsidering a heavily negotiated
   and judicially scrutinized settlement agreement that is quintessentially
   economic in nature.
          Even if we consider the fact issues raised by Ogle, they do not
   persuade. Ogle raises two issues based on excerpts from the fairness hearing.
   He asserts that the 80/20 distribution of settlement proceeds was motivated
   by the fact that “the fox [was] still controlling the henhouse,” and the state
   court judge expressed “serious concerns about the plan allocation” but
   nevertheless acquiesced and approved the settlement “because there’s been
   no objection to it.” As to the first point, the Delaware court’s consideration
   of Erickson’s leadership composition when assessing the settlement’s
   fairness is not incompatible with a finding of reasonable equivalence as a
   matter of law. In Erlewine, we recognized that “[i]ntangible, non-economic
   benefits, such as preservation of marriage, do not constitute reasonably
   equivalent value.” 349 F.3d at 212 (quoting Hinsley v. Boudloche (In re
   Hinsley), 201 F.3d 638, 643 (5th Cir. 2000) (internal citation omitted))
   (brackets in original). But we also recognized that this “sound principle”
   was inapplicable to a property division that “was above all an economic
   transaction.”   Id.   That proposition is even more appropriate for the
   quintessentially economic transaction here.

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           Ogle’s second point is meritless and misconstrues the record. The
   Delaware court did not express reservations about the 80/20 division of the
   settlement proceeds in the fairness hearing. Instead, its “concerns about the
   plan of allocation” centered entirely on how the shareholders’ 80% portion
   would be distributed. The judge was specifically concerned about “sellers
   who, as a matter of Delaware law, gave up their Delaware law claims,” and
   expressed concern that the settlement was “going to naturally skew towards
   larger institutional holders who can more easily maintain and assemble [the
   required] records.” These concerns are irrelevant to our purposes here.
           In short, consistent with Besing and Erlewine, there was reasonable
   equivalence as a matter of law. The Delaware settlement “should not be
   unwound by the federal courts merely because of its unequal division of
   [settlement proceeds].” Erlewine, 349 F.3d at 212–13.
           2.      Actual Fraud
           Ogle’s attempt to attack the Delaware releases as actually fraudulent
   transfers also fails. We see no error in the lower courts’ conclusion that Ogle
   failed to adequately plead actual fraud, and his arguments on appeal do not
   convince us otherwise. 13
           The complaint crucially omits any facts alleging fraud on the Delaware
   court to obtain its approval of the settlement. Had such facts been alleged,
   they might be considered “independent claims over which the [federal]
   district court had jurisdiction” because they do “not seek to overturn the
   state-court judgment” and the injuries did not “aris[e] from the []
   judgment.”       Truong v. Bank of Am., 717 F.3d 377, 383 (5th Cir. 2013)

           13
              Besing was explicit that its holding extended only to constructive fraud claims—
   not to claims of actual fraud. 981 F.2d at 1496. We decline the Defendants’ invitation to
   extend Besing and Erlewine to actual fraud under the facts before us.

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   (concluding Rooker-Feldman did not bar allegations that the state court was
   “misled” into thinking certain evidence was “authentic,” and the plaintiff
   was “misled” into “foregoing her opportunity to dispute authenticity in the
   state-court proceedings”). The complaint fails to allege such facts here.
           At best, Ogle points to various badges of fraud, emphasizing that
   (1) Erickson had been sued prior to giving out the releases; (2) the transfer
   was to insiders or their associates; (3) the absence of reasonably equivalent
   value; and (4) Erickson’s insolvency at the time the releases were given. But
   these so-called indicators of fraud do not hold up to scrutiny. Erickson was
   technically sued prior to the Delaware settlement, but only as a nominal
   defendant—the relevant suit alleged derivative claims and was effectively
   brought on Erickson’s behalf. The reasonable equivalence argument is little
   more than an attempt to re-argue the constructive fraud issue in the guise of
   an actual fraud claim. And the allegation that insiders benefited fails to
   account for the fact that the substance of the settlement was approved by
   non-insiders including Erickson’s independent directors and legal counsel,
   the third-party mediator, and the Delaware court. That leaves the allegation
   of Erickson’s insolvency at the time the release was given. Standing alone,
   this is nothing like the kind of irregularity needed to allege an “independent
   claim” involving a state court judgment. 14

           14
               This conclusion holds true under both ordinary and heightened pleading
   standards. Thus, we need not reach the issue whether Rule 9(b)’s heightened pleading
   standard for allegations of fraud applies to fraudulent transfer claims under the Bankruptcy
   Code. See FED. R. CIV. P. 9(b) (requiring allegations of “fraud or mistake” to be stated
   “with particularity”); Life Partners Creditors’ Trust v. Cowley (In re Life Partners Holdings,
   Inc.), 926 F.3d 103, 117–18 (5th Cir. 2019) (declining to answer this “vexing question” and
   concluding the relevant complaint was sufficient “under either standard”); cf.
   5A CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE
   § 1297 (4th ed. 2019 update) (“Claims of fraudulent transfer or fraudulent conveyance are
   also subject to the heightened standard of Rule 9(b).”). We further observe that Ogle does
   not appear to have raised this issue before the lower courts. He contended instead that the

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   B.      The Evergreen Payments
           As we will explain in more detail below, the lower courts erroneously
   concluded that Ogle was enjoined by a provision of the Delaware judgment
   from asserting avoidance and recovery claims challenging Erickson’s $2.5
   million payment to Centre Lane and $27.5 million payment to ZM Entities
   relating to the Evergreen Transaction. These claims are asserted by Ogle in
   his capacity as trustee of the post-confirmation litigation trust and assignee
   of the claims in question. We also reject Defendants’ alternative theory that
   claim preclusion bars these claims. The pleading is sufficient for Ogle to
   proceed on the $27.5 million payment, but Ogle fails to allege a plausible
   claim of actual or constructive fraud with respect to the $2.5 million payment
   to Centre Lane.
           1.      Trustee is Not Enjoined by the Delaware Settlement
           The bankruptcy court erred in concluding Ogle was enjoined by the
   Delaware settlement, as Erickson’s successor and assignee, from asserting
   any claims relating to the Evergreen Transaction. Technically, Ogle is the
   trustee of a litigation trust created according to Erickson’s reorganization
   plan for the benefit of the debtor’s creditors. He is not a Chapter 11 trustee
   and therefore not endowed with all the statutory powers of a trustee or debtor
   in possession under the Bankruptcy Code. But although his status is legally
   different, he was assigned post-petition claims that arose pursuant to
   §§ 544(b) and 550 of the Bankruptcy Code. Defendants cite no authority
   suggesting that a state court settlement can bar a successor to the debtor,
   specifically the trustee of a litigation trust like Ogle, from pursuing claims

   complaint satisfies the heightened pleading standard. See Certain Underwriters at Lloyd’s
   v. Axon Pressure Prods. Inc., 951 F.3d 248, 273 n.20 (5th Cir. 2020) (“Arguments not raised
   in the district court cannot be asserted for the first time on appeal.” (quoting Greenberg v.
   Crossroads Sys., Inc., 364 F.3d 657, 669 (5th Cir. 2004))).

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                                          No. 20-10908

   under the Bankruptcy Code. 15 Acting in his specific capacity, Ogle is not
   enjoined by the Delaware settlement from asserting creditor claims that arose
   only under the Bankruptcy Code.
           2.      Claim Preclusion Does Not Bar Claims
           Defendants’ argument has some appeal in urging that Ogle’s
   avoidance claims under §§ 544(b) and 548 essentially seek to relitigate the
   fiduciary breach and unjust enrichment claims resolved in the Delaware
   settlement. We conclude, however, that the claims are not barred under a
   straightforward application of Delaware preclusion law. Sid Richardson
   Carbon & Gasoline Co. v. Interenergy Res., Ltd., 99 F.3d 746, 756
   (5th Cir. 1996) (“We determine the preclusive effect of a state court
   judgment according to state law.” (citation omitted)).
           In Delaware, claim preclusion applies where: “(1) [T]he original
   court had jurisdiction over the subject matter and the parties; (2) the parties
   to the original action were the same as those parties, or in privity, in the case
   at bar; (3) the original cause of action or the issues decided was the same as
   the case at bar; (4) the issues in the prior action must have been decided
   adversely to the appellants in the case at bar; and (5) the decree in the prior
   action was a final decree.” LaPoint v. AmerisourceBergen Corp., 970 A.2d 185,

           15
              See also 5 COLLIER ON BANKRUPTCY ¶ 544.06 (16th ed. 2021) (“Under section
   544(b)(1), the trustee succeeds to the rights of an unsecured creditor in existence at the
   commencement of the case who may avoid the transfer under applicable law.”); In re
   Moore, 608 F.3d 254, 260 (5th Cir. 2010) (“Central to this bankruptcy is the trustee’s
   power under § 544(b), which allows him to succeed to the actual, allowable and unsecured
   claims of the estate’s creditors. See 11 U.S.C. § 544(b). If an actual, unsecured creditor
   can, on the date of the bankruptcy, reach property that the debtor has transferred to a third
   party, the trustee may use § 544(b) to step into the shoes of that creditor and ‘avoid’ the
   debtor’s transfer.”). A Chapter 11 debtor possesses all the powers of a trustee under the
   Bankruptcy Code. Ad Hoc Grp. of Vitro Noteholders v. Vitro S.A.B. de C.V. (In re Vitro S.A.B.
   de C.V.), 701 F.3d 1031, 1049 n.20 (5th Cir. 2012).

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   192 (Del. 2009). These avoidance claims based on the Evergreen payments
   fail prong two for lack of privity. As best we can determine, Erickson’s
   creditors, now represented by Ogle, were neither parties nor “in privity”
   under Delaware law with Erickson, on whose behalf the shareholder
   derivative suit was filed.
           Lacking authority from the state supreme court on the scope of
   privity, we make an Erie guess and rely on “decisions of intermediate state
   appellate courts . . . unless other persuasive data indicates the [Delaware]
   Supreme Court would decide otherwise.” Wright v. Excel Paralubes,
   807 F.3d 730, 734 (5th Cir. 2015). An oft-cited case holds that “[p]arties are
   in privity for res judicata when their interests are identical or closely aligned
   such that they were actively and adequately represented in the first suit.”
   Aveta Inc. v. Cavallieri, 23 A.3d 157, 180 (Del. Ch. 2010). 16 See also Higgins v.
   Walls, 901 A.2d 122, 138 (Del. Sup. Ct. 2005)(“[A] nonparty will be bound
   when its interests were represented adequately by a party in the original
   suit.”). 17 This is broad language, but neither our research nor that of the
   parties uncovered a Delaware decision in which a shareholder derivative suit
   sufficed to establish privity between the plaintiffs or the corporation and

           16
              See Israel Disc. Bank of New York v. Higgins, No. CV 9817-VCP, 2015 WL
   5122201, at *9 (Del. Ch. Aug. 31, 2015); Brevan Howard Credit Catalyst Master Fund Ltd. v.
   Spanish Broad. Sys., Inc., No. CV 9209-VCG, 2015 WL 2400712, at *3 (Del. Ch. May 19,
   2015); Sussex Cnty. v. Sisk, No. CIV.A. 8915-MA, 2014 WL 3954929, at *3 (Del. Ch.
   Aug. 13, 2014); Levinhar v. MDG Med., Inc., No. CIV.A. 4301-VCS, 2009 WL 4263211, at
   *10 n.41 (Del. Ch. Nov. 24, 2009).
           17
              Recently, the author of Aveta purported to retract that decision’s broad
   statement in favor of a narrower formulation of privity. See In re Columbia Pipeline Grp.,
   Inc., No. CV 2018-0484-JTL, 2021 WL 772562, at *18 (Del. Ch. Mar. 1, 2021), cert. denied
   sub nom. In re Columbia Pipeline Grp. Inc. (Del. Ch. 2021), and appeal refused sub nom. In re
   Columbia Pipeline Grp., Inc. Merger Litig., 249 A.3d 801 (Del. 2021). That decision,
   however, was unpublished and therefore entitled at most to “great deference” under
   Delaware law. See Aprahamian v. HBO & Co., 531 A.2d 1204, 1207 (Del. Ch. 1987).

                                                17
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   corporate creditors. Moreover, although both groups may share a common
   interest in restoring ill-gotten gains from the fiduciary breach of directors,
   creditors are not “closely aligned” with derivative plaintiffs and may not
   share in any recovery. Nor, because they have no direct stake in any recovery,
   are the interests of creditors actively, much less adequately represented in a
   derivative suit.
          The fundamental divide between the interests of corporate creditors
   and shareholders/derivative plaintiffs demonstrates why they are not in
   privity. Delaware’s Supreme Court has clearly differentiated between the
   claims that may be brought by or on behalf of a corporation against its
   directors and those that creditors may pursue. NACEPF v. Gheewalla,
   930 A.2d 92, 103 (Del. 2007). In that case, the court rejected creating claims
   by a creditor for breach of directors’ fiduciary duties toward a corporation
   with which it had a contract. The court held it “well established” that
   directors’ fiduciary obligations are owed to the corporation and its
   shareholders.      Id. at 99 (footnotes and citations omitted).                “While
   shareholders rely on directors acting as fiduciaries to protect their interests,
   creditors are afforded protection through contractual agreements, fraud and
   fraudulent conveyance law, implied covenants . . . , bankruptcy law, general
   commercial law and other sources of creditor rights.” Id. (footnotes
   omitted). Further, state law imposes responsibility on directors “to manage
   the business of a corporation for the benefit of its shareholder[] owners,” and
   fiduciary duties are imposed on them “when they perform that function.” Id.
   at 101 (emphasis in original). Consequently, the court disavowed any direct
   creditors’ claim for breaching fiduciary duties owed to a solvent corporation.
   Id. 18 From this discussion, the inescapable inference is that shareholder

          18
            When the shareholder and derivative suits were filed against Erickson, no claim
   was made of corporate insolvency at that time. Thus, we need not consider the court’s

                                             18
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                                           No. 20-10908

   derivative claims against certain of Erickson’s directors are intended to
   protect the interests of shareholders and maximize value for Erickson. Id. at
   100 (citing Prod. Res. Grp., L.L.C. v. NCT Grp., Inc., 863 A.2d 772, 790 (Del.
   Ch. 2004)). What maximizes value for Erickson as a going concern may or
   may not maximize value for its creditors, and those creditors must rely on
   other sources of law for their benefit. Thus, the “interests” of Erickson’s
   creditors vis a vis the corporation’s allegedly faithless directors were not
   necessarily aligned with or represented by the derivative plaintiffs.
           As noted by Gheewalla, of course, one of the creditors’ remedies lay
   in the provisions of bankruptcy law. Ogle, the litigation trustee for the trust
   created by Erickson’s reorganization plan, succeeded to the right to seek
   redress for intentional fraudulent transfers pursuant to 11 U.S.C. §§ 544(b),
   548. The potential overlap with the derivative plaintiffs’ previous fiduciary
   duty breach and unjust enrichment claims is undeniable, but theoretically,
   the challenged $27.5 million and $2.5 million Evergreen transfer payments
   to entities controlled by Defendants Morgan and Lau could separately have
   been deemed in fraud of Erickson’s creditors.
           3.       Sufficiency of the Pleadings
           Having concluded these claims are not precluded, we turn to
   Defendants’ contention that they fail to sufficiently plead fraud. Brown v.
   Tarrant Cnty., 985 F.3d 489, 494 (5th Cir. 2021) (“Under our precedent, we
   may affirm on any ground supported by the record, so long as the argument
   was raised below.” (internal quotation marks, citation, and alterations
   omitted)). We conclude Counts 1 and 4, regarding the $27.5 million payment
   to ZM Entities, sufficiently plead claims for actual fraud and recovery

   additional holding in Gheewalla that creditors of an insolvent corporation accede to fiduciary
   duty derivative claims because at that point, “its creditors take the place of the shareholders
   as the residual beneficiaries of any increase in value.” 930 A.2d at 101.

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                                        No. 20-10908

   pursuant to §§ 544(b) and 550. Counts 2, 3, and 5—alleging actual or
   constructive fraud with respect to Centre Lane’s $2.5 million transaction
   fee—do not.
                   (a)     The $27.5 Million Transfer
           Construing the factual allegations in the complaint in Ogle’s favor, as
   we must at this stage, the claims challenging the $27.5 million transfer state
   a plausible claim of actual fraudulent transfer under §§ 544(b) and 548.
   Specifically, the allegations are that Defendants obtained early repayment
   from Erickson on $27.5 million in debt as part of the transaction financing
   (a) knowing Erickson would at least be placed in severe financial difficulty,
   and with (b) the intent to jump the queue of creditors. Although this transfer
   was made in association with financing for the Evergreen Transaction,
   Erickson used it to satisfy debt owed to ZM Entities (which held a controlling
   interest in Erickson), but not as consideration for the purchase of EHI.
   Importantly, the complaint alleges that ZM Entities “received early payment
   of outstanding unsecured obligations purportedly owed by Erickson,” and in
   so doing left “Erickson’s other creditors to serve as bag holders of the newly
   undercapitalized company” that Defendants allegedly knew was headed
   toward bankruptcy. 19 The substance of this claim alleges more than bad
   decision-making by conflicted leaders to Erickson’s detriment (as was pled
   in the Delaware litigation for fiduciary breach and unjust enrichment).
   Rather, the complaint alleges an attempt to cheat other creditors of their due
   portion of the debtor’s assets, a claim which was not and could not have been
   addressed by the derivative plaintiffs in the Delaware litigation.

           19
             These allegations, in fact, are sufficient to satisfy the heightened pleading
   standard for Rule 9(b). See fn. 13 supra. See Williams v. WMX Techs., Inc., 112 F.3d 175,
   179 (5th Cir. 1997) (holding Rule 9(b) requires a plaintiff plead the “who, what, when,
   where, and how” of the alleged fraud).

                                              20
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                                     No. 20-10908

                 (b)    The $2.5 Million Transfer
          Not so for the actual and constructive fraud claims challenging the
   $2.5 million transfer (Counts 2 and 3), as the Trustee’s complaint itself is
   replete with information about the work Centre Lane performed on the
   transaction. For example, Centre Lane was hired to “provide the analysis of
   EHI’s prospects.” It “drove the financial modeling for EHI and maintained
   full control of that model,” and “solicited input from Erickson from time to
   time with respect to EHI projections.” While the complaint alleges these
   efforts were deceptive, deficient, and caused Erickson real harm, it does not
   plausibly allege the payment of $2.5 million for this work was part of an
   actually fraudulent scheme to defraud creditors. Nor does it plausibly allege
   constructive fraud. It does not, for instance, allege facts to support a finding
   that a $2.5 million transaction fee falls outside a range of reasonableness for
   the kind of work performed by Centre Lane with respect to a $250 million
   transaction. In short, paying Centre Lane for its work—even if it was as
   deficient and deceptive as the complaint alleges—does not, standing alone,
   constitute an actually or constructively fraudulent transfer.
                              III.   CONCLUSION
          For the foregoing reasons, we AFFIRM the dismissal of Counts 6–9
   seeking avoidance of and recovery for the releases in the Delaware settlement
   as actually and constructively fraudulent transfers (and Counts 10–12 as
   dependent on 6–9). We also AFFIRM dismissal of Counts 2, 3, and 5
   relating to the $2.5 million payment to Center Lane for its work on the
   Evergreen Transaction. We REVERSE the dismissal of Counts 1 and 4 to
   the extent they allege an actually fraudulent scheme to obtain early payment

                                          21
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                                       No. 20-10908

   on debt at the expense of other creditors in light of Erickson’s imminent
   bankruptcy. 20
                                          AFFIRMED in part, REVERSED in part.

          20
             To be clear, we make no judgment as to whether Erickson’s bankruptcy was, in
   fact, imminent at the time of the transfer, or decide any other questions of fact. Such
   questions will be explored in future proceedings on remand.

                                             22