The opinion
IN THE UNITED STATES DISTRICT COURT May 25, 2026
FOR THE SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk
HOUSTON DIVISION
IN RE GLOBAL CLEAN ENERGY §
HOLDINGS, INC., et al. §
§
Debtors, § CIVIL ACTION NO. H-25-3616
§
§ BANKRUPTCY CASE NO. 25-90113
DAVID COSTAGLIO, §
§
Appellant, §
v. §
§
GLOBAL CLEAN ENERGY §
HOLDINGS, INC., et al., §
§
Appellees. §
MEMORANDUM AND OPINION
In April 2025, the Debtors—Global Clean Energy Holdings, Inc. and a variety of affiliated
debtors and debtors in possession1—filed voluntary petitions for relief under Chapter 11. The
Bankruptcy Court later entered an order confirming the second amended joint Chapter 11
reorganization plan. The appellant, David Costaglio, now seeks to overturn the Plan, arguing,
among other things, that it was not proposed in good faith and that its third-party release,
injunction, and gatekeeper provisions are improper. Based on the briefs, the record, and the
applicable law, the court affirms the Bankruptcy Court’s order confirming the Plan. This appeal
is dismissed, for the reasons stated below.
1 The Debtors are: Global Clean Energy Holdings, Inc.; GCE Holdings Acquisitions, LLC; Rosedale
FinanceCo LLC; BKRF HCB, LLC; BKRF HCP, LLC; BKRF OCP, LLC; BKRF OCB, LLC; Bakersfield
Renewable Fuels, LLC; Agribody Technologies, Inc.; Sustainable Oils, Inc.; GCE International
Development, LLC; GCE Texas, LLC; GCEH Ventures, LLC; GCEH CS Acquisition, LLC; and GCE
Operating Company, LLC. (Bankr. Docket Entry No. 348 at 82).
I. Background
Global Clean Energy Holdings, Inc. is a vertically integrated provider of renewable fuels.
(Bankr. Docket Entry No. 215-2 at 17).2 As the Debtors explained in their amended disclosure
statement,3 in May 2020, Global raised $300 million in senior secured term loans from a group of
lenders to finance the acquisition of a former oil refinery in Bakersfield. (Id. at 19). Global
attempted to convert the existing crude oil refinery into a “state-of-the-art renewable fuels
refinery.” (Id.). Global hired CTCI Americas, Inc., an engineering services company whose
publicly traded parent is based in Taiwan, to do the construction work at the Bakersfield facility.
(Id.). The project had significant cost delays and overruns, creating a “series of disputes and
litigation” between Global and CTCI. (Id.). An interim settlement agreement did not end the
disputes. (Id.). Global eventually notified CTCI that it was terminating their agreement for cause.
(Id.). CTCI disputed that the agreement was properly terminated. (Id.).
The delays, cost overruns, and both actual and threatened litigation “posed an existential
risk” to Global. (Id.). From August 2022 through June 2024, the term loan lenders provided more
than $380 million in incremental term loans at the price of significant concessions from Global.
(Id.). Global also “confronted an over-saturated market for low emission biofuels and a changing
regulatory environment.” (Id. at 20). To figure out a path forward, Global hired Lazard Frères &
Co. LLC as its investment banker; Kirkland & Ellis, LLP as its legal counsel; Alvarez & Marsal
as financial adviser; and Todd Arden as an independent and disinterested director of the Board of
Directors. (Id.). Arden and an existing independent director, Susan Anhalt, made up a “Special
2 All references to “Bankr. Docket Entry No. ___” are references to docket entries in Bankruptcy Case No.
25-90113.
3 Costaglio’s dispute with the characterization of some of these facts is detailed further below.
2
Committee” of the Board. (Id.). Arden and Anhalt’s job was to evaluate restructuring alternatives
and address any conflicts associated with a potential transaction. (Id.).
Global determined that a “value-maximizing path forward” likely involved a global
resolution of its disputes with CTCI and continued support from the term loan lenders or a solution
underwritten by the term loan lenders in a contested in-court process. (Id.). Global’s advisors,
plus an ad hoc group of the term loan lenders holding approximately 96% of the term loans and
the lenders’ legal counsel and financial advisors, began discussing a global settlement with CTCI.
(Id. at 20–21). In those discussions, CTCI and the term loan lenders disputed the relative priority
of their claims. (Id. at 21). Global asserts that “[t]here is no doubt that this priority dispute, if not
resolved, could have resulted in an all-out, value-destructive war between the Term Loan Lenders
and CTCI.” (Id.). Those parties and their advisors negotiated for months on settlement terms and
restructuring transactions. (Id.). Global also engaged with Vitol, the lender under Global’s
revolving credit facility and a “key contract counterparty,” to negotiate the restructuring
transactions. (Id.). The term loan lenders continued to provide Global with tens of millions in
additional loans during this time. (Id.). Global also continued to work with Lazard to expand its
marketing process for a business opportunity, although no opportunity ever materialized. (Id.).
It “became clear” to Global that an in-court restructuring process was needed. (Id.). Vitol,
the ad hoc term lender group, and CTCI—the “Consenting Stakeholders”—engaged in extensive
negotiations with each other and with Global in the weeks leading up to filing the Chapter 11
petition. (Id. at 22). In March 2025, once these stakeholders identified a potential consensual path
forward, negotiations became “round-the-clock.” (Id). On April 25, 2025, the Debtors filed
voluntary petitions for relief under Chapter 11, along with their proposed Reorganization Plan.
(Bankr. Docket Entry No. 1, 23). In addition to a settlement with CTCI and billions in takeback
3
paper in the form of various loan alterations (the “Exit Facilities”)4, the Plan included a third-party
release, an injunction enforcing the third-party release, and a gatekeeper clause. (Bankr. Docket
Entry No. 23; see also Docket Entry No. 28 at 28 (explaining the Exit Facilities)). Consent for the
third-party release was to be obtained via opt out. (Bankr. Docket Entry No. 23 at 16). The
“Released Parties” included the Debtors, the Reorganized Debtors, the Consenting Stakeholders,
and all holders of claims and interests, among others. (Id.).
As this process was unfolding, the Special Committee investigated the Plan. (Bankr.
Docket Entry No. 340). It directed Kirkland to review Global’s books, records, transactions, and
actions taken before the Petition date. (Id. ¶ 16). Kirkland collected and reviewed tens of
thousands of internal documents from eight Debtor custodians and from Alvarez and Lazard. (Id.
¶¶ 16, 18). Kirkland also interviewed seven of the Debtors’ current and former directors. (Id.
¶ 22). Key areas for investigation included the transactions with CTCI and the Bakersfield project.
(Id. ¶ 27). Kirkland and Arden examined potential claims for breach of fiduciary duty, corporate
waste and mismanagement, breach of contract, and fraudulent transfer. (Id.). Arden concluded
that the Debtors had no viable estate claims and that the value of the global settlement far
outweighed any value from pursuing litigation against the “Released Parties.” (Id. ¶ 46). He
concluded, among other things, that pursuing litigation against the Released Parties would not
result in increased recoveries for any creditors. (Id.).
While Arden was investigating, a Creditors’ Committee that the U.S. Trustee had appointed
shortly after the Debtors filed for bankruptcy, (Bankr. Docket Entry No. 85 (notice of appointment
of Committee of Unsecured Creditors)), also investigated. The Debtors provided tens of thousands
4 In the final Plan, “Exit Facilities” were defined as “collectively, the Exit RCF Facility, the Exit Term Loan
Facilities, and the Exit EPC Claims.” (Bankr. Docket Entry No. 348 at 85).
4
of documents to the Creditors’ Committee. (Bankr. Docket Entry No. 340 ¶ 50). Arden explained
in his declaration to the Bankruptcy Court that after extensive negotiations among the Debtors, the
Creditors’ Committee, and others, the parties reached a comprehensive settlement, which Global
dubs the “Committee Settlement.” (Id. ¶ 52; see also Docket Entry No. 28 at 33). The final Plan
terms reflected the Committee Settlement. (Bankr. Docket Entry No. 340 ¶ 52). The Committee
had not supported the Plan when Global filed its amended disclosure statement in late May 2025,
(Bankr. Docket Entry No. 215-1 at 4), but did so by late July 2025, following its investigation.5
(Bankr. Docket Entry No. 340 ¶ 53).
Costaglio, a Global common shareholder, objected to the Plan shortly after it was filed and
continued to file a variety of motions to dismiss or otherwise stall the bankruptcy proceedings. On
April 28, 2025, Costaglio filed his objection to the Debtors’ Chapter 11 petition. (Bankr. Docket
Entry No. 105). Costaglio alleged that the Chapter 11 filing breached Global’s fiduciary
responsibilities to its shareholders and was a “mockery of the bankruptcy process.” (Id. at 1, 2).
On July 2, 2025, Costaglio filed an emergency motion to dismiss the bankruptcy case, accusing
Global of violating securities laws and regulations. (Bankr. Docket Entry No. 300 at 2). Costalgio
subsequently filed multiple separate motions asking the Bankruptcy Court appoint a trustee or
independent examiner and to create a Special Equity Committee on which Costaglio would serve.
(Bankr. Docket Entry No. 309; 319; 326). Costaglio reported his concerns about fraud to the U.S.
Trustee. (Bankr. Docket Entry No. 326 at 2). On July 22, 2025, Costaglio filed a motion asking
the Bankruptcy Court to withhold approval for the Plan until the Committee on Foreign Investment
5 At the confirmation hearing, counsel for the Official Committee of Unsecured Creditors spoke briefly to
“rise in support of the [P]lan and recognize the efforts of various parties that led us to today.” (Bankr.
Docket Entry No. 353 at 21).
5
in the United States (CFIUS) approved it, stating that he had already reported the matter to CFIUS.6
(Bankr. Docket Entry No. 330).
Arden’s declaration, which was filed after the last of Costaglio’s motions, responded
directly to some of Costaglio’s allegations. He refuted Costaglio’s assertion that Global’s former
CFO stepped down because he was unwilling to sign what Costaglio asserts are fraudulent SEC
filings. (Bankr. Docket Entry No. 340 ¶ 55). Arden also stated that “[b]ased on a review of tens
of thousands of documents and interviews with a number of different employees,” he had found
no evidence or facts to support Costaglio’s allegation that Global was falsifying or omitting
material information in its SEC filings prior to the petition date. (Id.). The U.S. Trustee apparently
declined Costaglio’s request for an equity committee. (See Bankr. Docket Entry No. 353 at 45).
On July 28, 2025, the Bankruptcy Court confirmed the Plan. (Bankr. Docket Entry No.
348). Costaglio attended the confirmation hearing, but he did not cross-examine the Debtors’ five
witnesses or present any evidence of his own.7 (Bankr. Docket Entry No. 353). After listening to
the witnesses and objectors, including Costaglio, the Bankruptcy Court overruled Costaglio’s
objections. The Bankruptcy Court explained that Arden’s report was “uncontradicted,” that he
had done a “very fulsome investigation,” and that “his report had a lot of credibility.” (Id. at 66).
6 Costaglio’s specific concern was that because the Plan contemplated granting a controlling equity interest
in Global to CTCI, a foreign contractor headquartered in Taiwan, CFIUS had to clear the transaction before
it could go through. (Bankr. Docket Entry No. 330 at 1).
7 The witnesses were John Walsh, managing director at Alvarez; Christian Tempke, a managing director at
Lazard; Pablo Hernandez, also a managing director at Lazard; Arden; and Stephanie Kjontvedt, a vice
president and senior consultant at Epiq Restructuring, the Debtors’ claims and noticing agent. (Bankr.
Docket Entry No. 353 at 33–34). Costaglio did speak briefly to argue that the proposed confirmation order
constituted “legal trickery” and to ask that confirmation be postposed until the U.S. Trustee had reviewed
it. (Bankr. Docket Entry No. 353 at 25). He also spoke to confirm that while he was not included in the
third-party release, other parties had to opt out, and to discuss other objections made by both himself and
the government. (Id. at 49–56). He also repeated his argument about CFIUS review. (Id. at 62–63).
6
The Bankruptcy Court also noted that the testimony of John Walsh, the managing director of
Alvarez, had established that the only way Global could address its liquidity issues was to have a
confirmed Plan pursuant to the Exit Facilities. (Id.). Finally, the Bankruptcy Court explained that
there was no cause to appoint an independent trustee; that the Plan clearly stated that it was subject
to regulatory approval, making the objection that Costaglio had filed with CFIUS irrelevant; and
that it did not have to reach the issue of appointing an independent examiner. (Id.at 67–68).
On August 4, 2025, Costaglio appealed.8 (Bankr. Docket Entry No. 381). Costaglio’s
opening brief contests 10 different aspects of the Bankruptcy Court’s decision and the Plan.9
(Docket Entry No. 23 at 1–2). The Debtors’ response brief clarifies that there are seven core issues
8 The Bankruptcy Court denied Costaglio’s emergency motion for a stay pending appeal. (Bankr. Docket
Entry Nos. 383, 388).
9 As Costaglio frames the case in his opening brief, the issues are:
Issue #1 – SEC omissions defeat § 1129(a)(3) good-faith and § 1129(a)(11)
feasibility.
Issue #7 – Rash requires replacement value methodology; Lazard’s SOTP EV is
legally insufficient for special-purpose refinery.
Issue #9 – Nonconsensual releases + prior-leave gate-keeper render the plan
“proposed by means forbidden by law.”
Issue #10 – Confirmation over the U.S. Trustee’s Purdue/Pacific Lumber
objection was legal error.
Issue #12 – The court’s “postpetition-only” lens misapplied § 1129(a)(3) and
(a)(11)
Issue #13 – Ownership reallocation and insider liquidity show creditor-driven
control inconsistent with § 1129(a)(3).
Issue #14 – Conflicts and inflated EPC claims required a § 1104 trustee/examiner
Issue #15 – The purportedly disinterested investigation was not; reliance on it
was reversible error.
Issue #16 – Chapter 11 was weaponized to privatize the enterprise and evade
SEC accountability.
Issue #17 – CFIUS exposure was live; deferring it was not good-faith
confirmation.
(Docket Entry No. 23 at 1–2).
7
on appeal. (Docket Entry No. 28 at 22–23). The court agrees that the response brief largely
appropriately frames the issues. Adapted lightly from the Debtors’ brief, the issues are:
1. Whether the Bankruptcy Court correctly found that the Plan was feasible under 11
U.S.C. § 1129(a)(11);
2. Whether the Bankruptcy Court correctly found that the Plan was proposed in good faith
and not forbidden by law under 11 U.S.C. § 1129(a)(3);
3. Whether Costaglio has standing to challenge the third-party release, injunction, and
gatekeeper provisions, and if so, whether those provisions are permissible;
4. Whether the Bankruptcy Court correctly declined to appoint a trustee under 11 U.S.C.
§ 1104(a)(1)–(2);
5. Whether the Bankruptcy Court correctly found that the Debtors’ valuation and
valuation methods were the appropriate measure of the Reorganized Debtors’ value;
6. Whether Costaglio has standing to challenge the Plan based on CFIUS review grounds
and whether, if so, whether the Bankruptcy Court properly found that the Plan
addressed the necessity of any CFIUS review.
Each of these issues is examined below.
II. The Legal Standard
A federal district court has jurisdiction to hear appeals from a bankruptcy court’s final
orders under 28 U.S.C. § 158(a). The district court reviews the bankruptcy court’s findings of fact
for clear error and conclusions of law de novo. See In re Whitley, 737 F.3d 980, 985 (5th Cir.
2013); In re Lothian Oil, Inc., 650 F.3d 539, 542 (5th Cir. 2011). Matters within the bankruptcy
judge’s discretion are review for abuse of discretion. See In re Gandy, 299 F.3d 489, 494 (5th Cir.
2002); In re Waco Town Square Partners, LP, 536 B.R. 756, 761 (S.D. Tex. 2015).
III. Analysis
Because Costaglio’s arguments are either meritless, waived,10 or both, the court affirms the
Bankruptcy Court’s order confirming the Plan.
10 “It is well established in the Fifth Circuit that, in a bankruptcy appeal, a district court cannot consider
issues that were not initially presented to the bankruptcy court.” Ferrell v. Countryman, 398 B.R. 857, 863
(E.D. Tex. 2009). It is also well established that arguments not raised sufficiently and distinctly in an
opening brief are waived. See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 260 n.9 (5th Cir.
1995). Although the failure to timely assert a right is technically forfeiture and not waiver, see Kontrick v.
8
A. Plan Feasibility under 11 U.S.C. § 1129(a)(11)
Costaglio argues that the Bankruptcy Court erred when it found that the Plan was feasible
under 11 U.S.C. § 1129(a)(11). (Docket Entry No. 23 at 3). “To obtain confirmation of its
reorganization plan, a debtor must show by a preponderance of the evidence that its plan is feasible,
which means that it is ‘not likely to be followed by . . . liquidation, or the need for further financial
reorganization.” In re Save Our Springs (S.O.S.) Alliance, Inc., 632 F.3d 168, 172 (5th Cir. 2011)
(quoting 11 U.S.C. § 1129(a)(11)). “The standard of proof required by the debtor to prove a
Chapter 11 plan’s feasibility is by a preponderance of the evidence.” In re T-H New Orleans Ltd.
P’Ship, 116 F.3d 790, 801 (5th Cir. 1997). A district court “typically review[s] a bankruptcy
court’s conclusions about plan feasibility for clear error.” In re Save Our Springs (S.O.S.) Alliance,
Inc., 632 F.3d at 172.
The Bankruptcy Court did not err, much less clearly err, in determining that the Plan was
feasible. The Bankruptcy Court relied on the financial projections attached to the disclosure
statement, along with other evidence. (Bankr. Docket Entry No. 348 at 33–34). The Court found
that the evidence was reasonable, persuasive, credible, and accurate; used reasonable
methodologies; was not controverted by other evidence; and established that confirmation was not
likely to be followed by liquidation. (Id). The evidence before the Bankruptcy Court included the
testimony of Walsh, who explained the preparation and basis for the financial projections and
provided his opinion that the Plan was feasible. (Bankr. Docket Entry No. 342 at 24–25, 52–60;
see also Bankr. Docket Entry No. 353 at 66). It is well-established that “[w]here the projections
are credible, based on the balancing of all testimony, evidence, and documentation, even if the
Ryan, 540 U.S. 443, 458 n.13 (2004), courts often use “forfeiture” and “waiver” interchangeably. For
simplicity, this opinion only uses the term “waiver.”
9
projections are aggressive, the court may find the plan feasible.” In re T-H New Orleans Ltd.
P’Ship, 116 F.3d at 820 (alteration in original) (quoting In re Lakeside Global II, Ltd., 116 B.R.
499, 508 n.20 (Bankr. S.D. Tex. 1989)). “Debtors are not required to view business and economic
prospects in the worst possible light.” Id.
Costaglio argues that the projections were nothing more than a “hope,” and that the
Bankruptcy Court should not have accepted them at face value, (Docket Entry No. 23 at 5), but he
offers no evidence in showing that the Bankruptcy Court clearly erred in determining that the Plan
was feasible. Costaglio also argues that past SEC omissions undercut the forward-looking
projections, (Docket Entry No. 23 at 5), but he similarly does not present support for how the
projections are undercut.11 And as Global explains, even if past revenue statements were concealed
(and Global argues they were not), past omissions are irrelevant to the Bankruptcy Court’s
forward-looking feasibility decision in this case. (Docket Entry No. 28 at 40). As Global also
points out, the purportedly omitted financial information was provided to the Bankruptcy Court
from the outset. (Docket Entry No. 28 at 40 (citing Bankr. Docket Entry No. 2 at 22)).
The court agrees with the Debtors: Costaglio has not shown how the existence of the
purportedly false—or at least incomplete—SEC filings means that the forward-looking projections
were not credible. And he has not shown that the Bankruptcy Court clearly erred by relying on
the detailed financial projections it was provided and the uncontradicted arguments and evidence
11 To the extent that Costaglio’s feasibility argument also relies on an assertion that Global made “half-
truths,” (see Docket Entry No. 23 at 5 (citing Macquarie Infrastructure Corp., 601 U.S. 257 (2024)), that
argument is irrelevant to the issue of feasibility. And as explained elsewhere, Costaglio does not have
standing to challenge the third-party releases, injunction, and most of the gatekeeper provision, and his
challenge to the remaining sliver of the gatekeeper provision loses on the merits. His challenges to those
provisions cannot undercut the feasibility finding. See In re Food City, 110 B.R. 808, 812 n.10 (Bankr.
W.D. Tex. 1990).
10
supporting them. Clear error is a high bar to meet.12 Costaglio has not “met his burden to show
that any of the Bankruptcy Court’s findings of fact failed to meet this highly deferential standard.”
Corletta v. Tex. Higher Educ. Coordinating Bd., 531 B.R. 647, 653 (W.D. Tex. 2015).
B. Good Faith under 11 U.S.C. § 1129(a)(3).
Intertwined with Costaglio’s argument about feasibility under § 1129(a)(11) is his
argument about good faith under § 1129(a)(3). This Code section “requires a plan proponent to
‘propose [its plan] in good faith and not by any means forbidden by law.’”13 In re Village at Camp
Bowie I, L.P., 710 F.3d 239, 244 (5th Cir. 2013) (alteration in original) (quoting 11 U.S.C.
§ 1129(a)(3)). “The requirement of good faith must be viewed in light of the totality of the
circumstances surrounding establishment of a Chapter 11 plan, keeping in mind the purpose of the
Bankruptcy Code is to give debtors a reasonable opportunity to make a fresh start.” In re T-H New
Orleans Ltd. P’Ship, 116 F.3d at 802. “Where the plan is proposed with the legitimate and honest
purpose to reorganize and has a reasonable hope of success, the good faith requirement of
§ 1129(a)(3) is satisfied.” Id. (quoting In re Sun Country Dev., Inc., 764 F.2d 406, 408 (5th Cir.
1985)). “The standard of proof required by the debtor to prove a Chapter 11 plan was proposed in
good faith is by a preponderance of the evidence.” Id. As with feasibility, the standard of review
is clear error. See In re Village at Camp Bowie I, L.P., 710 F.3d at 247.
12 Costaglio argues that it was “legal error” for the Bankruptcy Court to use a “‘post-petition only’ filter,”
(Docket Entry No. 23 at 16), but provides no evidence that the Bankruptcy Court did so when analyzing
feasibility. Regardless, the Bankruptcy Court heard, and considered, Costaglio’s arguments about
purported misconduct, and noted that Arden’s investigation (which found no claims worth pursuing) was
credible. Even if the Bankruptcy Court had committed legal error—and the court does not see that it did
so—this court can affirm for any reason supported by the record. As explained elsewhere, there is no
evidence of any pre-petition misconduct that would justify reversing the Bankruptcy Court, under any
standard of review.
13 As explained further below, Costaglio does not have standing to challenge the third-party releases and
cannot end-run around his lack of standing by framing his challenge as an § 1129 issue. His challenges
based on those provisions are discussed in the separate section below.
11
The Bankruptcy Court did not clearly err in determining that the Plan was proposed in good
faith. In concluding that the requirements of § 1129(a)(3) were met, Bankruptcy Court explained
that it had “examined the totality of the circumstances surrounding the Filing of these Chapter 11
Cases, including the RSA, the Plan, the Confirmation Declarations, the process leading to the
Confirmation, including the overwhelming support of Holders of Claims for the Plan, and the
transactions to be implemented pursuant thereto.” (Bankr. Docket Entry No. 348 at 30). The Plan
was supported by 100% of holders of prepetition term loan claims, 100% of holders of prepetition
CTCI-related claims, and an “overwhelming majority” of the voting holders of unsecured
creditors. (Docket Entry No. 28 at 43; see Bankr. Docket Entry No. 334 at 7). Courts recognize
that “arms-length negotiations” and “the overwhelming support of Claimants for the Plan” can
provide “independent evidence” of a debtor’s “good faith in proposing the Plan.” In re Gulf Coast
Holdings, Inc., No. 06-31695-BJH-11, 2007 WL 1340802, at *4 (Bankr. N.D. Tex. Apr. 30, 2007).
And “[a] debtor pursuing a prepackaged plan and proposing a settlement to voters is not bad faith.”
In re Red River Talc LLC, 670 B.R. 251, 306 (Bankr. S.D. Tex. Mar. 31, 2025).
Against the evidence of months of arms’ length negotiations and overwhelming Plan
support, Costaglio argued before the Bankruptcy Court (and argues on appeal) that Global made
misstatements in its SEC reports and otherwise engaged in securities fraud, which undermines a
finding of good faith. Costaglio’s arguments about pre-petition conduct are largely irrelevant to
the Bankruptcy Court’s good-faith determination, however; pre-petition actions “are immaterial to
whether the proposed plan is consistent with the objectives of the Bankruptcy Code and the
likelihood of the Plan’s success.” In re Geijsel, 480 B.R. 238, 255 (Bankr. N.D. Tex. 2012). Even
if it were relevant, there is no evidence of pre-petition misconduct that could support reversing the
Bankruptcy Court’s good faith determination on any ground. Arden’s investigation found no
12
evidence of securities fraud or other intentional omissions or actionable conduct. And as the
Bankruptcy Court pointed out, the Creditors’ Committee would have had an interest in finding
causes of action that would have created additional value for them. (Bankr. Docket Entry No. 353
at 65–66). Costaglio himself recognized before the Bankruptcy Court that his interests were
“aligned” with those of the Creditors’ Committee, because both sought to “maximize creditor
recovery” and to “be made financially whole.” (Bankr. Docket Entry No. 309 at 1). Had there
been viable claims, the Creditors’ Committee seemingly would have pursued them.
To the extent that Costaglio’s good faith arguments do address post-petition conduct and
the Plan itself, (See Docket Entry No. 23 at 18–21, 24–27), that his own “view of the record”
convinces him that the Bakersfield project was profitable and that the ownership allocation in the
Plan is a “payoff for a deliberate strategy to privatize [Global] at equity’s expense,” (Docket Entry
No. 29 at 15–16), is insufficient for this court to find clear error on good faith. That is speculation
without evidentiary support.14 Much of Costaglio’s appeal appears to stem from his
(understandable) frustration that he received nothing as a shareholder, but that is simply how the
process often works. “In the vast majority of reorganization cases, the debtor corporation is
insolvent and, upon confirmation of a plan of reorganization or liquidation, equity holders will
receive nothing.” La. World Exposition v. Fed. Ins. Co., 858 F.2d 233, 250–51 (5th Cir. 1988). It
is “[o]ne of the painful facts of bankruptcy” that shareholder interests “become subordinated to the
interests of creditors.” Commodity Futures Trading Com’n v. Weintraub, 471 U.S. 343, 355
14 Costaglio’s reply brief asserts that the Plan was not proposed in good faith because “[a]ny reasonable
person can see that, had Debtors disclosed the refinery’s true production volumes and tens of millions of
dollars it generated in 2024, the market would have immediately recognized the Company’s value and the
share price would have surged—eliminating any plausible claims of ‘hopeless insolvency’ and preventing
this insider-orchestrated Chapter 11.” (Docket Entry No. 29 at 11). There is no credible support for that
assertion that could undercut the Bankruptcy Court’s evidence-based good-faith determination.
13
(1985). That Costaglio lost his investment, and that he believes something generally nefarious
was afoot, is insufficient to overturn the Bankruptcy Court’s good faith determination.15
In sum, as with feasibility, the Bankruptcy Court did not clearly err in determining that,
based on the totality of the circumstances, the Plan was proposed in good faith. “Ultimately, the
§ 1129(a)(3) inquiry is fact-specific, fully empowering the bankruptcy courts to deal with
chicanery. We will continue to accord deference to their determinations.” In re Village at Camp
Bowie I, L.P., 710 F.3d at 248. Costaglio has provided no basis to undermine the Bankruptcy
Court’s determination that this complicated Plan, involving multiple settlements, multiple rounds
of negotiation, and multiple investigations, was not proposed in good faith.
C. The Third-Party Release and Gatekeeper Provisions
Costaglio also challenges the third-party release, injunction, and gatekeeper clauses.
(Docket Entry No. 23 at 9). The Debtors argue that because Costalgio opted out of the third-party
release, he does not have standing to challenge either it or the injunction provision, which merely
enforces the third-party release. (Docket Entry No. 28 at 44). The Debtors also argue that
Costaglio lacks standing to challenge the gatekeeper provision and that his challenge fails on the
merits. (Id. at 52). Costaglio repeats many of the criticisms others have made about third-party
releases and gatekeeper provisions. See, e.g., In re Container Store, 676 B.R. 356 (S.D. Tex.
15 As the Bankruptcy Court explained, “while it’s unfortunate that equity is not getting any recovery here,
the absolute priority rule actually dictates that result because I could not have confirmed a plan in which
unsecured creditors were getting paid less than full and provide a recovery to equity without the actual
consent of the unsecured creditors. And obviously that wasn’t here.” (Bankr. Docket Entry No. 353 at 70).
Under the absolute-priority rule, “if a class of unsecured creditors rejects a plan, the plan must provide that
those claimants be paid on the effective date or any junior interest ‘will not receive or retain under the plan
. . . any property.’” In re Highland Cap. Mgmt., 48 F.4th 419, 433 (5th Cir. 2022) (emphasis omitted)
(quoting 11 U.S.C. § 1129(b)(2)(B)). The absolute priority rule “enforces a strict hierarchy [of creditor]
rights defined by state and federal law” and “has long been a feature of American bankruptcy law.” In re
Pac. Lumber Co., 584 F.3d 229, 244 (5th Cir. 2009).
14
2026). The court agrees in large part with the Debtors and concludes that Costaglio lacks standing
to challenge the third-party release and injunction; lacks standing to challenge the part of the
gatekeeper provision on Released Parties; and that his challenge to the part of the gatekeeper
provision on Exculpated Parties fails on the merits.
Standing in bankruptcy cases is governed by the “person aggrieved test.” In re Coho
Energy Inc., 395 F.3d 198, 202 (5th Cir. 2004). “The ‘person aggrieved’ test is an even more
exacting standard than traditional constitutional standing.” Id. “Because bankruptcy cases
typically affect numerous parties, the ‘person aggrieved’ test demands a higher causal nexus
between act and injury; appellant must show that he was ‘directly and adversely affected
pecuniarily by the order of the bankruptcy court’ in order to have standing to appeal.” Id. at 202–
03 (quoting In re Fondiller, 707 F.2d 441, 443 (9th Cir. 1983)). “This restriction narrows the
playing field, ensuring that only those with a direct, financial stake in a given order can appeal it.
Thus in bankruptcy litigation, as in life, ‘the more money we come across, the more problems we
see.’” In re Technicool Sys., Inc., 896 F.3d 382, 386 (5th Cir. 2018) (quoting NOTORIOUS B.I.G.,
Mo Money Mo Problems, on LIFE AFTER DEATH (Bad Boy/Arista 1997)).
In this case, Costaglio was not a “Releasing Party” or a “Released Party.”16 He cannot
show that he was been “directly and adversely pecuniarily” affected by this part of the Plan. Courts
routinely conclude that plaintiffs do not have standing to challenge a third-party release when they
opt out of that release. Patterson v. Mahwah Bergen Retail Grp., Inc., 636 B.R. 641, 664 (E.D.
Va. 2022); In re Indianapolis Downs, LLC, 486 B.R. 286, 304 (Bankr. D. Del. 2013); Mercy Health
16 Costaglio appears not to have formally chosen to opt out but was instead carved out of the Plan as a non-
Releasing Party based on his objections. (Bankr. Docket Entry No. 344 ¶ 124). The carve-out for Costaglio
was discussed at the hearing and Costaglio made no objection to it; he merely raised his concern that the
general opt-out provision was unlawful for other claimants. (Bankr. Docket Entry No. 353 at 49–51).
15
Network, Inc. v. Mercy Hosp., 671 B.R. 499, 507 (N.D. Iowa 2025); Talarico v. Ultra Petrol.
Corp., No. 4:20-CV-3244, 2020 WL 8361996, at *3 (S.D. Tex. Dec. 29, 2020). The court agrees
with these decisions and concludes that Costaglio does not have standing to challenge the third-
party release. And because he does not have standing to challenge the third-party release, he does
not have standing to challenge the injunction (which enforces the release) or the part of the
gatekeeper provision on “Released Parties.” The Plan is clear that the part of the gatekeeper
provision on “Released Parties” does not apply to parties who have not consented to the third-party
release.17 And although Costaglio mostly frames his challenge to these provisions as part of his
good-faith argument (calling them “means forbidden by law”), he cannot obtain standing to
challenge these provisions by relabeling them as challenges under §1129. See Mercy Health
Network, Inc., 671 B.R. at 508. That would be an end-run around bankruptcy standing. Because
Costaglio does not have standing to challenge these provisions, the court does not reach the merits
on those issues. See Ctr. for Biological Diversity v. U.S. Env’t Prot. Agency, 937 F.3d 533, 545
(5th Cir. 2019) (“Because Petitioners lack standing, we do not reach the merits of their claims.”).
That the U.S. Trustee objected to the third-party releases and would have had appellate
standing to challenge these provisions had it chosen to pursue an appeal, see In re Container Store
Grp., Inc., 676 B.R. at 368–71, does not give Costaglio standing to appeal these provisions on the
U.S. Trustee’s behalf, as he appears to assume it does. (See, e.g., Docket Entry No. 23 at 14
(stating that the U.S. Trustee’s objections “preserved” the errors related to the third-party release,
17 The somewhat narrow nature of this gatekeeper provision appears to have been the product of
negotiations between the U.S. Trustee and the Debtors. (Bankr. Docket Entry No. 353 (counsel for the
Debtors explaining that “we’ve tried to work with the Office of the United States Trustee by adding some
language or clarifying language to the confirmation order, which really says that the gatekeeping provision
only applies to the release[d] parties to the extent that any person or entity bringing the claim or cause of
action is a releasing party.”)).
16
injunction, and gatekeeping provisions)).18 A party generally cannot appeal “to champion the
rights of another.” See Rohn & Hass Tex., Inc. v. Ortiz Bros. Insulation, Inc., 32 F.3d 205, 208
(5th Cir. 1994). “It is hornbook law that ‘a party may only appeal to protect its own interests, and
not those of a coparty.’” Morrison-Knudsen Co., Inc. v. CHG Int’l, Inc., 811 F.2d 1209, 1214 (9th
Cir. 1987) (quoting Libby, McNeill, & Libby v. City Nat’l Bank, 592 F.2d 504, 511 (9th Cir. 1978)).
The U.S. Trustee would have had appellate standing because it “represents a significant and
concrete public interest” in advocating for those that have not formally appeared in the
proceedings. In re Container Store Grp., Inc., 676 B.R. at 371. Costaglio points to no doctrinal
equivalent that would give him, a private party, standing to appeal on behalf of the U.S. Trustee.
The court concludes, however, that Costaglio has standing to challenge the part of the
gatekeeper provision related to Exculpated Parties.19 It is not “speculative” that if Costaglio
wanted to sue an Exculpated Party, he would have to receive permission from the Bankruptcy
Court to do so. Global’s citations to the contrary are irrelevant to the issue of gatekeeper clauses
and prophylactic checks on future litigation. (See Docket Entry No. 28 at 53–54 (citing In re
Highland Cap. Mgmt., L.P., 2023 WL 2263022, at *2 (5th Cir. Feb. 28, 2023) and In re Technicool,
896 F.3d at 386)). The convoluted Highland litigation does not show that a claimant must jump
through the numerous standing hoops that Global would impose on Costaglio to challenge the
gatekeeper provision as it relates to Exculpated Parties.
18 The U.S. Trustee’s objection before the Bankruptcy Court may have preserved the issue for appeal, but
that does not provide Costaglio with standing to appeal on this issue. See, e.g., In re First Brands Grp.,
Civ. Action No. H-26-513, 2026 WL 1110319, at 2–3 (S.D. Tex. Apr. 24, 2026).
19 The Plan defines “Exculpated Parties” as “(a) the Debtors; (b) the independent directors or managers of
any Debtor, for conduct within the scope of their duties; and (c) the Committee and each member of the
Committee.” (Bankr. Docket Entry No. 348 at 85).
17
But Costaglio’s challenge nonetheless fails on the merits. He has not shown how the part
of the gatekeeper provision related to Exculpated Parties was reversible error.20 In In re Highland
Capital Management, the Fifth Circuit affirmed a gatekeeper provision with a definition of
Exculpated Parties substantially similar to the one here. 132 F.4th 353, 360 (5th Cir. 2025).
Costaglio’s arguments on the gatekeeper clause relate almost exclusively to the fact that the
gatekeeper clause creates a pre-filing injunction against Released Parties, which he argues is
improper because the releases were non-consensual. (See, e.g., Docket Entry No. 23 at 10, 13–
14). As noted above, Costaglio does not have standing to challenge the consensual (or not) nature
of the third-party release. And Costalgio fails to identify or argue any particular error in applying
the gatekeeper provision to Exculpated Parties (rather than Released Parties) or why this provision
does not comply with Highland’s approval of substantially similar gatekeeper provisions. “Judges
are not like pigs, hunting for truffles buried in briefs.” United States v. Dunkel, 927 F.2d 955, 956
(7th Cir. 1991); see also United States v. Delgado, 672 F3d 320, 329 n.6 (5th Cir. 2012) (“We
have no obligation to address—much less ferret out—errors not presented in an appellant’s
opening brief, and as a general matter, such matters are forfeited.”) (en banc). The court need not
hunt for, or intuit, an error that Costaglio has not adequately presented to the court, no matter that
he is pro se. See Geiger v. Jowers, 404 F.3d 371, 373 n.6 (5th Cir. 2005) (per curiam) (“Although
pro se briefs are to be liberally construed, pro se litigants have no general immunity from the rule
that issues and arguments not briefed on appeal are abandoned.” (citation omitted)).
20 For this reason, he has not shown how the part of the gatekeeper provision on Exculpated Parties plausibly
violates the good faith requirement, either.
18
In sum, Costaglio lacks standing to challenge the third-party release, the injunction, and
the portion of the gatekeeper clause related to Released Parties. He has standing to challenge the
portion of the gatekeeper clause on Exculpated Parties, but his challenge fails on the merits.
D. Appointing a Trustee under 11 U.S.C. § 1104(a)(1)-(2)
Next, Costaglio argues that the Bankruptcy Court erred in failing to appoint a trustee under
§ 1104(a).21 (Docket Entry No. 23 at 21). “When a debtor-in-possession is incapable [o]f
performing its statutory duties, a chapter 11 trustee may be appointed.” In re Ford Steel, LLC, 629
B.R. 871, 889 (Bankr. S.D. Tex. 2021). “However, the appointment of a trustee is the exception,
rather than the rule, and is an extraordinary remedy.” Id. “Although the Code contains no
particular standard of proof, the majority view is that the party moving for appointment of a trustee
must prove the need for a trustee by clear and convincing evidence.” Id. “When deciding whether
relief under § 1104(a)(2) is warranted, courts consider: (i) the trustworthiness of the debtor; (ii)
the debtor-in-possession’s past and present performance and prospects for the debtor’s
rehabilitation; (iii) the confidence—or lack thereof—of the business community and of credits in
present management; and (iv) the benefits derived by the appointment of a trustee; balanced against
the cost of the appointment.” Id. at 890.
Costaglio did not show that the “draconian” and “rare” remedy of appointing a trustee was
warranted. See In re Texasoil Enterprises, Inc., 296 B.R. 431, 435 (Bankr. N.D. Tex. 2003). As
21 The Debtors argue that Costaglio has waived any argument related to the need to appoint an “examiner”
under 11 U.S.C. § 1104(c). (Bankr. Docket Entry No. 28 at 59 n.3). The court agrees. As with many of
Costaglio’s other arguments, the passing mentions of an “examiner” in the opening brief (see Docket Entry
23 at 2, 18, 21, 23, 34, 27), are insufficient. See Grayson O Co. v. Agadir Int’l LLC, 856 F.3d 307, 316
(4th Cir. 2017) (“A party waives an argument by failing to present it in its opening brief or by failing to
develop its argument—even if its brief takes a passing shot at the issue.” (cleaned up)). The only argument
articulated with any specificity is that a trustee should have been appointed under 11 U.S.C. § 1104(a).
Regardless, for the largely the same reasons articulated as to good faith and appointment of a trustee, the
Bankruptcy Court did not err in not appointing an independent examiner.
19
detailed elsewhere, the Bankruptcy Court found Arden’s investigation credible,22 and that
investigation found no pre-petition conduct that created claims worth pursuing. Nor did Costaglio
provide evidence of post-petition conduct that warranted the appointment of a trustee by “clear
and convincing” evidence. “A strong presumption exists that the debtor should maintain control
of the estate. In order to overcome this presumption, the movant bears the burden of providing by
clear and convincing evidence the necessity for the appointment of a trustee.” In re Evans, 48
B.R. 46, 47 (Bankr. W.D. Tex. 1985). Costaglio did not present the necessary evidence to the
Bankruptcy Court of conduct that would justify the extraordinary remedy of appointing a trustee,
(see, e.g., Bankr. Docket Entry Nos. 309, 319, 326), which would have cost the Debtors money
that they did not have. (See also Bankr. Docket Entry No. 353 at 65 (the Bankruptcy Court
explained that the only source of funds for an independent person would be the Debtors)). The
record shows no basis to reverse the Bankruptcy Court’s decision not to appoint a trustee.
E. Valuation Methods
At various points throughout his opening brief, Costaglio asserts that the Bankruptcy Court
used improper valuation methods. However, Costaglio has waived the argument he now makes
on appeal. That is, Costaglio’s valuation argument is premised on the Bankruptcy Court’s alleged
failure to apply the replacement value method set forth in Assocs. Com. Corp. v. Rash, 520 U.S.
953 (1997). (Docket Entry No. 23 at 6). After the Debtors raised the issue of waiver in their
response brief, Costaglio argued in his reply that this argument was not waived because he
“consistently challenged Lazard’s methodology and conclusions in the Bankruptcy Court.”
22 To the extent that Costalgio now challenges Arden’s independence, (Docket Entry No. 23 at 23–24), that
argument is waived because he did not raise it below. Regardless, Costaglio has not presented sufficient
evidence to undercut the Bankruptcy Court’s determination that Arden was credible.
20
(Docket Entry No. 29 at 22). However, the record does not show that Costaglio raised arguments
related to Rash sufficient to put the Bankruptcy Court on notice that he was making a challenge
based on replacement-value methodology.23 The fact that Costaglio is pro se is not, as he asserts
(id.), a full defense against waiver. See United States v. Gonzalez, No. 23-50193, 2024 WL
1478874, at *2 (5th Cir. 2024) (“True, we liberally construe the briefs of pro se litigants and apply
less stringent standards to parties proceeding pro se than to parties represented by counsel.
Nonetheless, pro se litigants—like all other parties—remain subject to rules of waiver and
forfeiture.” (cleaned up)). The point of waiver is that it “requires parties to put all of their
arguments before the appropriate court at the appropriate time for a full resolution of their claims.”
In re Cherry, 341 B.R. 581, 590 n.10 (Bankr. S.D. Tex. 2006). Costaglio did not do so.
The issue of Rash and replacement-value methodology was not sufficiently raised before
the Bankruptcy Court. It is waived. In any event, as the Debtors argue, Rash concerns a specific
scenario for cramming down secured claims, see In re Stembridge, 394 F.3d 383, 386 (5th Cir.
2004); it does not inherently apply to all valuation calculations. See, e.g., In re Mirant, 334 B.R.
800, 816 (Bank. N.D. Tex. 2005) (describing and applying other kinds of valuation calculations).
And Costaglio did not articulate in his opening with any particularity why, outside of the alleged
legal failure in not applying Rash, the valuation calculations were erroneous, let alone clearly
erroneous.24 See In re T-H New Orleans Ltd. P’ship, 116 F.3d at 799 (“Valuation is a mixed
23 At most, as far as the court can tell, Costaglio argued that the Bankruptcy Court should have applied a
“real estate valuation method.” (Bankr. Docket Entry No. 319 at 3). That passing mention of “real estate
valuation”—which neither directly mentions “replacement value” nor Rash—is insufficient to preserve the
arguments he now makes on appeal. “Merely mentioning a legal issue in general terms [in the court below]
is . . . insufficient; an argument must be ‘raised to such a degree that the trial court may rule on it.’” NCDR,
L.L.C., 745 F.3d 742, 752 (5th Cir. 2014) (quoting XL Specialty Ins. Co. v. Kiewit Offshore Servs., Ltd.,
513 F.3d 146, 153 (5th Cir. 2008)).
24 Costaglio’s valuation arguments are all inherently legal challenges based on Rash; the court does not see
any sufficiently articulated stand-alone factual challenges. (See, e.g., Docket Entry No. 23 at 9–10).
21
question of law and fact, the factual premises being subject to review on a clearly erroneous
standard, and the legal conclusions being subject to de novo review.”). The court will not reverse
the Bankruptcy Court’s conclusion that the valuation evidence was credible, either.
F. CFIUS Review
Finally, Costaglio argues that the Bankruptcy Court erred because the Plan’s sale of a
controlling stake of Global to CTCI triggered a CFIUS review. (Docket Entry No. 23 at 27). The
Bankruptcy Court overruled Costaglio’s objection, noting that to the extent CFIUS review might
be required, the Plan “clearly contemplates that it cannot go effective unless all necessary and
required regulatory approvals are obtained, and to the extent that they’re not obtained, the [P]lan
can’t go effective.” (Bankr. Docket Entry No. 353 at 67). Costaglio argues that this court should
remand to require the Bankruptcy Court to (among other things) determine “whether CFIUS
notification . . . is mandatory” and “whether the governance/consent rights and offtake/credit
arrangements must be restructured to avoid foreign control.” (Docket Entry No. 23 at 28).
The court agrees with the Debtors that Costaglio lacks standing to raise these issues on
appeal. (Docket Entry No. 28 at 67–68). Only parties to a transaction or CFIUS itself can initiate
review. See Ralls Corp. v. Comm. on Foreign Inv. in U.S., 758 F.3d 296, 302 (D.C. Cir. 2014).
Costaglio argues in his reply brief that he has standing “because the failure to obtain any CFIUS
clarity before confirmation directly affects the value and stability of the reorganized enterprise.”
(Docket Entry No. 29 at 24). He asserts that the “regulatory shock” will hit “any residual equity
interests,” but does not explain how it will affect him personally, given that he is undisputably out-
of-the-money. (Bankr. Docket Entry No. 353 at 70). In short, Costaglio has presented the kind of
“speculative” harm that the Fifth Circuit has cautioned is insufficient for bankruptcy appellate
standing. See In re Technicool Sys., Inc., 896 F.3d at 386. That Costaglio “feels grieved” by the
22
Bankruptcy Court’s decision not to force a CFIUS review (however that would work) “does not
make him a ‘person aggrieved’ for the purpose of bankruptcy standing.” /d. Because Costaglio
does not have standing to raise this issue, the court does not reach the merits of whether, and how,
the Bankruptcy Court could force CFIUS review or the kind of restructuring Costaglio seeks. But
the court does note that, as the Bankruptcy Court stated, the Plan could not go into effect until all
regulatory approvals that were required were obtained. The Plan did not allow the Debtors to
avoid any necessary approvals, should such approvals be required.”°
IV. Conclusion
The court affirms the Bankruptcy Court’s order confirming the second amended joint
chapter 11 plan. (Bankr. Docket Entry No. 348). This appeal is dismissed.
SIGNED on May 25, 2026, at Houston, Texas.
LW
Rosenthal
Senior United States District Judge
The court also agrees with the Debtors that to the extent that Costaglio argues in his opening brief that
confirming the Plan without CFIUS review violated the good-faith and feasibility requirements, that
argument is waived. (Docket Entry No. 28 at 68).
23