____________________________________

Erika L. Morabito (VSB No. 44369)

Brittany J. Nelson (VSB No. 81734)

QUINN EMANUEL URQUHART & SULLIVAN LLP

1300 I Street, N.W., Suite 900

Washington, DC 20005

(202) 538-8334 (telephone)

Email: erikamorabito@quinnemanuel.com

brittanynelson@quinnemanuel.com

Special Counsel to Lynn L. Tavenner, Chapter 7 Trustee

UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

(Richmond Division)

In re:

LeClairRyan, PLLC,1

Debtor.

Case No. 19-34574-KRG

Chapter 7

Lynn L. Tavenner, as Chapter 7 Trustee,

Plaintiff,

v.

ULX Partners, LLC, UnitedLex Corporation, 

and ULX Manager LLC,

Defendants.

Adv. Proc. No. 20-03142 (KRH)

TRUSTEE’S MOTION AND MEMORANDUM OF LAW FOR ENTRY OF AN ORDER 

(I) APPROVING (A) JUDICIALLY MEDIATED SETTLEMENT AND (B) 

COMPENSATION TO COUNSEL INCLUDING AN IMPROVIDENT PAYMENT

UNDER SECTION 328(A); AND (II) GRANTING RELATED RELIEF

Lynn L. Tavenner, Trustee, not individually, but solely in her capacity as the Chapter 7 

trustee (in such capacity, the “Trustee”) of the bankruptcy estate (the “Estate”) of LeClairRyan 

1 The principal address of the Debtor as of the Petition Date was 4405 Cox Road, Glen Allen, Virginia 23060, and the 

last four digits of the Debtor’s federal tax identification number are 2451.

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PLLC (“LeClairRyan” and/or the “Debtor” and/or “LCR”)), in the above-referenced Chapter 7 

case, by counsel, respectfully states as follows in support of this motion (the “Motion”): 

PRELIMINARY STATEMENT

1. After months of intense, hard fought arm’s-length negotiations, and with the 

significant assistance and critical involvement of a judicial mediator, the Trustee, all of the 

defendants in two separate adversary proceedings, and certain insurers, have reached a global, 

comprehensive agreement that is a fair and reasonable compromise of the claims and causes of 

action asserted by the Trustee in those two separate adversary proceedings. Among other things, 

this settlement agreement avoids the lengthy, complex, and expensive litigation of myriad disputed 

issues among these parties, and it is undoubtedly in the best interest of the Estate.

2. More specifically, this Motion seeks the entry of an order (1) approving the 

Settlement (as hereafter defined) by and among the Trustee, on the one hand and ULX Partners, 

LLC, ULX Manager LLC, and UnitedLex Corporation (collectively, the “ULX Defendants”), 

CVC Advisers (India) Private Limited and/or CVC Capital Partners (“CVC”), Daniel Reed, 

Nicholas Hinton, Josh Rosenfeld, and P. Douglas Benson (collectively, with the ULX Defendants, 

the “Defendants”), Travelers Casualty and Surety Company of America (“Travelers”), 

Continental Casualty Company (“Continental”), and Columbia Casualty Company (“Columbia”) 

(collectively, Continental and Columbia are referred to as “CNA” and Travelers and CNA are 

referred to as the “Insurers”);

2 (2) authorizing the effectiveness of the Settlement Agreement (as 

hereafter defined and attached hereto as Exhibit A) on behalf of the Estate; (3) approving a

Contingency Payment (as hereafter defined) and authorizing the Trustee to pay the same; and (4)

2 The Trustee, the Defendants, and the Insurers may be referred to hereinafter collectively as the “Parties.”

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approving the Improvident Payment (as hereafter defined) in an amount to be determined by the 

Court and authorizing the Trustee to pay the same.

3. Thus, for the reasons set forth herein, the Trustee respectfully submits that the 

Settlement satisfies the standards for approval under applicable law and that the Court should 

therefore approve the Settlement pursuant to section 105 of the Bankruptcy Code and Bankruptcy 

Rule 9019 and grant other relief requested in this Motion. 

JURISDICTION AND VENUE

4. The United States Bankruptcy Court for the Eastern District of Virginia has 

jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Standing Order of 

Reference from the United States District Court for the Eastern District of Virginia, dated August 

15, 1984.

5. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2).

6. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

7. The bases for the relief requested herein are sections 105(a) and 328(a) of the 

Bankruptcy Code, Bankruptcy Rule 9019, and Rule 9019-1 of the Local Rules of the United States 

Bankruptcy Court for the Eastern District of Virginia.

BACKGROUND

A. The Bankruptcy Proceeding and Prosecution of Certain Claims 

8. On September 3, 2019 (the “Petition Date”), the Debtor filed for relief under 

Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§101-1532 (as thereafter amended, 

the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of 

Virginia, Richmond Division (the “Bankruptcy Court”). Pursuant to §§ 1007 and 1108 of the 

Bankruptcy Code, the Debtor operated as a debtor-in-possession.

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9. Per agreement between the Debtor, the United States Trustee, and ABL Alliance, 

LLP, the Debtor’s Chapter 11 case was converted to a case under Chapter 7 of the Bankruptcy 

Code on October 4, 2019. Upon conversion, Lynn L. Tavenner was appointed interim trustee, and 

no trustee having been elected at the meeting of creditors, she continues to serve as the Trustee. 

10. Consistent with her duties, the Trustee began investigating potential causes of 

action on behalf of the Estate. Initially, the Trustee, with the assistance of her counsel, filed a

Motion for an Order Establishing Procedures Regarding the Prosecution of Actions Involving 

Former Attorneys and Certain Others and Memorandum in Support Thereof (the “FAO 

Procedures Motion”) (Main Dkt No. 457).3 The FAO Procedures Motion was approved by Order 

of this Court (Main Dkt No, 533), as amended/supplemented by additional Orders of this Court 

(Main Dkt No. 929 and 982) (collectively, the “FAO Order”).

11. On October 26, 2020, the Trustee filed an adversary proceeding against ULX 

Partners, LLC and UnitedLex Corporation, Adversary Proceeding No. 20-03142 (as amended, the 

“UnitedLex Adversary Proceeding”).4

12. Thereafter, the Trustee also issued demand letters to more than 200 other potential 

defendants, including defendants Hinton, Reed, Rosenfeld, Benson, and CVC. The FAO Order 

established procedures that, among other things, allowed for a potential defendant to elect 

mediation prior to the Trustee filing a lawsuit. 

3 “Main Dkt” refers to the docket in the main Bankruptcy Case. “Dkt.” refers to the docket in the United Lex 

Adversary Proceeding, while “Reed Dkt” refers to the docket in the Reed Adversary Proceeding (as hereafter 

defined).

4 On December 12, 2019 ULX Partners, LLC filed Proof of Claim No. 174 in the amount of $8,563,288 and Proof 

of Claim No. 175 in the amount of $3,952,025 (collectively, the “ULX Partners Proofs of Claim”).

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the Opposition to First Motion to Amend, and the Amended Complaint are incorporated as if fully 

set forth herein.

19. The First Amended Complaint asserted, among other things, the following causes 

of action against ULX Partners, LLC, ULX Manager LLC, and/or UnitedLex Corporation:

(1) avoidance of preferential and/or fraudulent transfers under sections 544, 547, 

548 and 550 of the Bankruptcy Code; 

(2) disallowance of claims under Section 502(d) of the Bankruptcy Code;

(3) lack of consideration for intellectual property under the contribution agreement;

(4) re-characterization of debt as equity;

(5) misappropriation of trade secrets; 

(6) breach of fiduciary duty; 

(7) statutory and common law conspiracy;

(8) an accounting; 

(9) conversion; 

(10) unjust enrichment; and 

(11) alter ego liability.9

20. After the granting of the Motion to Amend, a two-week trial in the UnitedLex 

Adversary Proceeding was scheduled to begin on April 14, 2022. [Dkt No. 144].

21. On January 28, 2022, the ULX Defendants filed a Motion for Summary Judgment 

[Dkt No. 133] (the “Motion for Summary Judgement”) and associated documents, seeking to 

dismiss certain of the UnitedLex Claims. The Trustee opposed the Motion for Summary Judgment 

[Dkt No. 152] (the “Opposition to Summary Judgment”) and the Bankruptcy Court has not yet 

ruled on the Motion for Summary Judgment. The Motion for Summary Judgment, the Opposition 

to Summary Judgment, and associated pleadings are incorporated as if fully set forth herein. 

9 The claims asserted in the First Amended Complaint as set forth therein against the ULX Defendants are referred 

to herein as the “UnitedLex Claims.” The Reed Adversary Claims and the UnitedLex Claims are collectively 

referred to herein as the “Claims.”

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any [ULX Defendant], Mr. Hinton, and/or Mr. Reed tendered coverage for the claims at issue 

herein or the [Reed Adversary Proceeding], including all excess policies regardless of the coverage 

position taken by the relevant insurance company”; and (2) “all coverage letters and/or denial of

coverage letters from any insurance company regarding coverage under any of the policies 

provided [pursuant to the March 8 Insurance Order], including but not limited to coverage 

positions taken by the insurance company, and any non-privileged or otherwise protected response 

to such insurance company by the [ULX Defendants], Mr. Hinton, and/or Mr. Reed thereto.”

28. Also on March 8, 2022, the Mediator entered an “Order Directing the Exchange of 

Information Between the Defendants, Nicholas Hinton, Daniel Reed, the Insurance Companies 

and the Chapter 7 Trustee” [Dkt No. 178] (the “Information Exchange Order”). The Information 

Exchange Order required, among other things, the Trustee to provide “the identity of the Trustee’s 

anticipated trial expert with respect to the damages the Trustee alleges were proximately caused 

by the [ULX Defendants, Reed and Hinton], as well as a summary of the expert’s opinions to date 

as to the amount of such alleged damages and the basis therefore (the “Trustee’s Damages 

Report”). Additionally, the Information Exchange Order required the ULX Defendants, Reed, 

and Hinton to identify the ULX Defendants’ “anticipated expert as to damages, along with a 

summary of that expert’s opinions to date rebutting the Trustee’s Damage Report.” Finally, the 

Information Exchange Order also directed that the ULX Defendants provide the Mediator for his 

“en camera review, their year-end financial statements for the last two years, as well as financial 

statements indicating their current financial condition.”

29. On March 9, the Bankruptcy Court entered an order that the trial in this matter be 

continued until May 17 and also continued other pending motions in the case. See Dkt No. 184.

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Trustee, through counsel, to inform the Court at the impending hearing of the material terms of the 

Settlement reached between the Parties. As such, the material terms of the Settlement were set 

forth on the record at the April 19, 2022, hearing with the participation of counsel for the ULX 

Defendants, Mr. Hinton, and Mr. Reed. Thereafter, the Second Motion to Amend was continued 

to allow the Parties to document the Settlement. 

D. The Global Settlement Agreement

37. In addition to the terms being articulated on the record at the April 18, 2022,

hearing, the Settlement is further memorialized in a certain settlement agreement (the “Settlement 

Agreement”) (attached hereto as Exhibit A) and is incorporated as if fully set forth herein. The 

key terms of the Settlement Agreement between the Parties, subject to the Bankruptcy Court’s 

approval, are as follows:12

a. Continental Payment: In consideration of the mutual releases, covenants, 

representations, and undertakings of the Trustee, the Defendants, and the Insurers, 

Continental shall pay the Trustee a sum of five million dollars ($5,000,000) on or 

before the Closing Date.13

b. Columbia Payment: In consideration of the mutual releases, covenants, 

representations, and undertakings of the Trustee, the Defendants, and the Insurers, 

Columbia shall pay the Trustee a sum of seven million two hundred and fifty

thousand dollars ($7,250,000) on or before the Closing Date.

c. Travelers Payment: In consideration of the mutual releases, covenants, 

12 The summary set forth in this section is qualified by the specific provisions of the Settlement Agreement. To the 

extent there is any inconsistency between this summary and the Settlement Agreement, the Settlement Agreement 

governs. 

13 All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Settlement 

Agreement. 

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representations, and undertakings of the Trustee, the Defendants, and the Insurers, 

Travelers shall pay the Trustee a sum of five hundred thousand dollars ($500,000) 

on or before the Closing Date.

d. Defendants’ Payment and Pledge of Security: In consideration of the mutual 

releases, covenants, representations, and undertakings of the Trustee and the 

Defendants, the Defendants shall pay to the Trustee a total sum of eight million two 

hundred and fifty thousand dollars ($8,250,000). This sum is scheduled to be paid 

in three installments. The first installment of at least two million dollars 

($2,000,000) will be paid on or before the Closing Date. The second installment of 

three million dollars ($3,000,000) will be paid on or before the first anniversary of 

the Closing Date, and the third installment of three million two hundred and fifty 

thousand dollars ($3,250,000) will be paid on or before the second anniversary of 

the Closing Date. Both the Second Defendants’ Payment and the Third Defendants’ 

Payment are fully secured by Notes and Irrevocable Letters of Credit. 

e. Starr Policy Proceeds: As part of the Settlement Agreement, neither the 

Defendants nor the Trustee release Starr from any obligations under the Starr 

Policy. If any of the Defendants receive any proceeds from Starr under the Starr 

Policy related to this matter, the proceeds (net any costs of reasonable attorneys’ 

fees incurred in pursuit of the collection of the proceeds) must be turned over and 

paid to the Trustee. 

f. Waiver of Proofs of Claim: ULX Partners, LLC agrees to waive the ULX Partners 

Proofs of Claim, the present value of which is estimated by the ULX Defendants 

(and not the Trustee) to be $2.4 million.

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g. Consensual Releases: The Settlement Agreement includes certain consensual

releases of Claims amongst the Parties. 

h. Compensation of Counsel: Consistent with the Order entered by the Bankruptcy 

Court on June 28, 2021 [Main Dkt. No. 937], Quinn Emanuel shall be entitled to 

receive 35% of the Total Settlement Payment as provided in the Quinn Retention 

Order (the “Contingency Payment”). In addition, the Settlement Agreement 

contemplates an Improvident Payment of an aggregate amount not to exceed 

$3,150,000 (the “Improvident Payment”) to Quinn Emanuel. By this Motion, the 

Trustee seeks approval of this Improvident Payment on account of the fact that,

among other things, the terms of the Quinn Retention Order have proven to be 

improvident in view of circumstances in this matter that were not capable of being 

anticipated at the time of entry of the Quinn Retention Order. The Improvident 

Payment is subject to the Estate receiving the Total Settlement Payment and the 

Defendants do not object to the Improvident Payment. Furthermore, the Trustee 

maintains that Quinn Emanuel provided necessary additional non-contingent 

services (the “Additional Services”) that arose from the Two Adversary 

Proceedings that otherwise would have been compensated on an hourly basis had 

the Trustee and Quinn Emanuel known all of the facts and circumstances regarding 

this matter. Notwithstanding the fact that Quinn Emanuel asserts that the value of 

the Additional Services exceeds the amount of the Improvident Payment, the

Settlement Agreement provides that Quinn Emanuel agrees to limit the amount of 

the Improvident Payment to $3,150,000 or such other amount otherwise approved 

by the Bankruptcy Court. 

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i. No Admission of Liability By Any of the Parties

j. Dismissal: The Two Adversary Proceedings will be dismissed with prejudice. 

38. The Settlement, as documented in the Settlement Agreement, was the product of an 

arms-length negotiation, and globally resolves, on terms beneficial to the Estate, complicated 

litigation in the Two Adversary Proceedings, the continued pursuit of which would be costly and 

time consuming and pose the risk of an unfavorable result.

MEMORANDUM OF LAW

39. The Trustee believes, in her business judgment and after substantial analysis, that

entering into the Settlement Agreement is reasonable under these circumstances and respectfully

requests that the Court approve the Settlement (and related Settlement Agreement), including the 

Improvident Payment, and all other relief requested in this Motion. The Settlement (as 

documented in the Settlement Agreement) will allow the Estate and all interested parties to avoid 

the uncertainty and costs of extensive litigation to determine the recovery on the Claims and 

eliminates the uncertainty of litigation and the risks of collectability of any judgment that may be 

obtained. Most importantly, the Settlement will allow the Estate to proceed towards a meaningful 

distribution to creditors on a more expedited timeline. Accordingly, for the following reasons, the

Trustee believes that entry into the Settlement Agreement is in the best interests of the Estate, its

creditors, and other parties in interest and that the Settlement (and related Settlement Agreement)

should be approved by the Bankruptcy Court. 

A. Entry into the Settlement Agreement Is Fair and Equitable and in the Best 

Interest of the Estate

40. Bankruptcy Rule 9019(a) provides, in relevant part, that “[o]n motion by the trustee 

and after notice and a hearing, the court may approve a compromise or settlement.” Fed. R. Bankr. 

P. 9019(a). The United States Supreme Court has noted that “[c]ompromises are a ‘normal part 

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of the process of reorganization.’” Protective Comm. for Indep. Stockholders of TMT Trailer 

Ferry, Inc. v. Anderson, 390 U.S. 414, 424 (1968) (citing Case v. Los Angeles Lumber Prods. Co.,

308 U.S. 106, 130 (1939)). In TMT Trailer, the Supreme Court stated that compromises and 

settlements must be “fair and equitable.” 390 U.S. at 424; see also In re Loudoun Heights, LLC,

No. 13-15588, 2014 WL 2928110, at *8 (Bankr. E.D. Va. June 27, 2014) (same); Shaia v. Three 

Rivers Wood, Inc. (In re Three Rivers Wood, Inc.), No. 98-38685, 2001 WL 720620, at *6 (Bankr. 

E.D. Va. Mar. 20, 2001) (same); In re Frye, 216 B.R. 166, 174 (Bankr. E.D. Va. 1997) (same); In

re Austin, 186 B.R. 397, 400 (Bankr. E.D. Va. 1995) (same).

41. Compromises are tools for expediting the administration of the case and reducing 

administrative costs and are favored in bankruptcy. See In re Bond, 16 F.3d 408 at *3 (4th Cir. 

1994) (unpublished table decision) (“To minimize litigation and expedite the administration of a 

bankruptcy estate, compromises are favored in bankruptcy”) (citations omitted). The Trustee, in 

her business judgment, believes that the Settlement Agreement represents a fair and reasonable 

compromise of the disputed issues regarding the Claims, as set forth in greater detail herein.

42. The decision whether to approve a compromise under Rule 9019 is committed to 

the discretion of the Court, which must determine if the compromise or settlement is “fair and 

equitable”. In re Health Diagnostic Lab., Inc., 2016 Bankr. LEXIS 3724 (Bankr. E.D. Va. Oct. 

14, 2016); In re Alpha Nat. Res. Inc., 544 B.R. 848, 856 (Bankr. E.D. Va. 2016); In re Frye, 216 

B.R. 166, 174 (Bankr. E.D. Va. 1997). The Court is not required to conduct a “mini-trial” of the 

underlying case, but instead must only decide whether the settlement proposed falls “below the 

lowest point in the range of reasonableness.” In re Austin, 186 B.R. at 400 (citations omitted); 

accord In re Alpha Nat. Res. Inc., 544 B.R. at 857. 

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43. Factors that the Court should consider when evaluating a settlement under 

Bankruptcy Rule 9019 include: (a) “the probability of success in litigation;” (b) “potential 

collection struggles;” (c) “the complexity, time and expense involved in litigating the matter;” and 

(d) whether the proposed compromise is fair and equitable to the debtor, its creditors, and other 

parties in interests. Loudoun Heights, 2014 WL 2928110, at *9 (citations omitted); see also TMT,

390 U.S. at 424; Three Rivers Wood, 2001 WL 720620, at *6 (same); In re Alpha Nat. Res. Inc.,

544 B.R. at 857; In re Frye, 216 B.R. at 174. 

44. Additionally, the Court must determine whether the proposed settlement is in the 

best interests of the Estate. Three Rivers Wood, 2001 WL 720620, at *6 (“a compromise or 

settlement will most likely gain approval if it is both ‘fair and equitable,’ as well as representative 

of the best interests of the estate as a whole”) (citations omitted); Frye, 216 B.R. at 174 (“In order 

to approve a compromise, this court must look at various factors and determine whether the 

compromise is in the best interest of the estate and whether it is fair and equitable.”); In re Energy 

Coop. Inc., 886 F.2d 921, 927 (7th Cir. 1989) (“The benchmark for determining the propriety of a 

bankruptcy settlement is whether the settlement is in the best interests of the estate.”). 

45. The factors that courts consider in determining whether a settlement is in the best 

interests of a bankruptcy estate are similar to the factors examined to determine whether the 

settlement is fair and equitable. See Parker v. Bullis (In re Bullis), 515 B.R. 284, 288 (Bankr. E.D. 

Va. 2014) (“The best interests of the estate are met by considering the same factors a court 

considers in reviewing any proposed settlement: (1) the probability of success on the merits in the 

litigation; (2) possible difficulties of collecting any judgment which might be obtained; (3) the 

complexity, expense, and likely duration of any ensuing litigation; and (4) the interests of the 

creditors, giving proper deference to their reasonable views.”) (citations omitted).

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46. Basic to the process of evaluating proposed settlements is “the need to compare the 

terms of the compromise with the likely rewards of litigation.” TMT, 390 U.S. at 425. However, 

“the settlement may be approved even if the court finds it likely that the trustee would ultimately 

succeed in the litigation.” In re Austin, 186 B.R. at 400. 

47. When reviewing a proposed settlement, the Court may consider the Trustee’s 

business judgment and the opinions of the other parties to such settlement, and the Court should 

not substitute its judgment for that of the Trustee. Instead, the Court must determine “whether the 

settlement falls below the lowest point in the range of reasonableness.” Three Rivers Wood, 2001 

WL 720620, at *6 (citing Austin, 186 B.R. at 400). Where a proposed settlement is not below the 

lowest point of what is fair and reasonable and represents the best interests of the estate as a whole, 

the court should approve it pursuant to Bankruptcy Rule 9019. Id.

48. In this case, the Trustee believes that the Settlement is fair, equitable, in the best 

interests of the Estate, appropriate in the Trustee’s business judgment, and easily falls within the 

reasonable range of outcomes. As set forth above, the Settlement (as documented in the Settlement 

Agreement) is the culmination of more than several months of negotiations among the parties, with 

the Mediator’s assistance and direction, and represents a global resolution of the Claims. The 

Trustee, in the exercise of her business judgment and in consultation with her professionals and 

the Mediator, believes that the Settlement (as documented in the Settlement Agreement) is a fair,

reasonable, and responsible compromise and resulted in maximum value to the Estate for the 

reasons that follow.

49. First, the Settlement (as documented in the Settlement Agreement) is the result of 

extensive good faith and arms-length negotiations among the Trustee, the Defendants, and the 

Insurers. It was aided and directed by the substantial participation and input of the Mediator and 

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represents a result well above the lowest bound of the range of reasonableness. It in fact is the 

Mediator’s Proposal. This Settlement is not collusive and represents a fair compromise of the 

disputes. 

50. Assuming this Court approves this Motion and authorizes the Trustee to enter into 

the Settlement, the Trustee will receive (i) fourteen million seven hundred fifty thousand dollars 

($14,750,000) on or before the Closing Date; and (ii) an additional six million two hundred fifty 

thousand dollars ($6,250,000) after the Closing Date (collectively, the “Settlement Payment

Cash Funds”). These amounts, which are a sum certain, are potentially greater than any recovery 

the Estate would ultimately receive even if the Two Adversary Proceedings proceeded to 

judgement and is well above the lowest bound of the range of reasonableness. 

51. Second, both before and during the Mediation, the Trustee conducted due diligence 

on the enforcement and ultimate collectability of potential judgments against the Defendants.

With the assistance of the Mediator and her counsel, the Trustee determined, among other things, 

that proceeds from the Insurance Policies for a settlement and the payments received from the 

Defendants were the best source of payment to compensate the Estate for damages associated with 

the Claims. Significantly, the majority of the Settlement Payment Funds are available to the 

Trustee on the Closing Date, allowing the Trustee and her professionals to focus time and effort 

on other important matters in this Bankruptcy case, including but not limited to the review, analysis 

and resolution of alleged administrative expenses and pre-petition claims.

52. Third, the consideration in the Settlement Agreement represents a fair and 

reasonable compensation to the Estate for the Claims in light of the uncertainty and risk associated 

with time-consuming and expensive litigation that could result in an unfavorable outcome. 

Specifically, the Trustee preserves additional Estate resources that would have been spent on, 

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among other things, a two-week trial in the United Lex Adversary Proceeding, prosecuting the 

Reed Adversary Proceeding, and any associated appeals. Given the scope and complexity of the 

United Lex Adversary Proceeding, the Trustee and her counsel had anticipated that the Reed

Adversary Proceeding could have been equally time-consuming and complicated. Moreover, in 

agreeing to the releases provided for in the Settlement Agreement, the Trustee and all Parties 

contemplated the value of the Claims being released. 

53. Fourth, the Settlement as directed by the Mediator and memorialized in the

Settlement Agreement is fair and equitable to the Estate, its creditors, and other parties in interest. 

The value of the Settlement, which includes the Settlement Payment Cash Funds and the waiver 

of the ULX Partners Proof of Claims, represents a result well above the lowest bound of the range 

of reasonableness and does not prejudice other creditors or parties in interest. To the contrary, 

the Settlement should allow the Trustee to make a meaningful distribution to creditors. Most 

importantly, the Settlement will allow the Estate to proceed towards a more expeditious resolution, 

rather than prolonged litigation (and potential appeals) in the Two Adversary Cases.

54. Finally, the Improvident Payment was unilaterally directed by the Mediator as part 

of the Mediator’s Proposal as a material and integral term of the Settlement and as such is in the 

best interest of the Estate. Absent approval of the Settlement Agreement, Quinn Emanuel would 

otherwise seek compensation on an hourly basis by the Estate in an amount that would exceed 

$3,150,000. Furthermore, Quinn Emanuel has agreed to limit the amount of the Improvident 

Payment to the lesser of $3,150,000 or an amount otherwise approved by the Bankruptcy Court

As such, the Settlement provides a sum certain to be recovered by the Estate and defers to this 

Court as to the ultimate allowance of the Improvident Payment to Quinn Emanuel in an amount as 

determined by this Court but in no instance greater than $3,150,000.

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62. Judge Phillips’ reasoning in approving a global settlement agreement in In re Toys 

“R” US, Inc., et. al., No. 17-34665 (“TRU”) is instructive here as to certain threshold issues. 

Specifically, the settlement agreement in TRU included a provision that awarded a substantial 

contribution payment to counsel of an ad hoc group of creditors. See TRU Dkt No. 4803 (“TRU 

Order”), attached as Exhibit C.

15 In approving the substantial contribution, Judge Phillips found 

that it was a “material and integral portion” of the TRU settlement agreement and that the 

settlement was “fair and reasonable and adequately supported by the declarations and exhibits 

submitted by members of the group which have sufficiently enabled the Court to perform any 

gatekeeping role it may have in connection with determining the reasonableness” of the substantial 

contribution payment. See TRU August 7, 2018 Transcript at p. 221, attached as Exhibit D. 

Alternatively, Judge Phillips also held that the payment was authorized pursuant to section 503(b) 

of the Bankruptcy Code. See TRU August 7, 2018 Transcript at p. 221; TRU Order at 6-7.

63. Likewise, in this case, payment of the Improvident Payment is a material and 

integral part of the Settlement Agreement. As described above, the Improvident Payment was part 

of the Mediator’s Proposal; it is a critical component of the Settlement Agreement.16 Further, just 

like in TRU, the Bankruptcy Court here may exercise its own gatekeeper role of determining 

whether the Improvident Payment is warranted and reasonable. Thus, pursuant to section 105 of 

the Bankruptcy Code and Bankruptcy Rule 9019, the Bankruptcy Court should approve the 

Settlement Agreement, regardless of whether the Improvident Payment separately qualifies as a 

15 While the Trustee recognizes that a substantial contribution claim is brought under section 503(b) and Quinn is 

seeking to be paid through the Settlement Agreement under section 328(a), the analysis of approving these 

extraordinary payments as a material and integral part of a settlement agreement is similar in both cases.

16 The Settlement Agreement makes clear that, while the Improvident Payment is a critical component of the 

Settlement, both the allowance and the amount of the Improvident Payment is left to the discretion of the 

Bankruptcy Court. Settlement Agreement at ¶ 3(h).

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payment under section 328(a) of the Bankruptcy Code. But, even if the Bankruptcy Court rejects 

this contention, as set forth above, the Improvident Payment should be approved because the 

payment also meets the standards set forth in section 328(a). 

CONCLUSION

64. All Defendants support the approval of the Settlement, and the Trustee, in the

exercise of her business judgment, supports all of the relief sought herein. 

WHEREFORE, the Trustee respectfully requests that the Court grant the Motion and 

thereby (a) approve the Settlement; (b) authorize the effectiveness of the Settlement Agreement 

on behalf of the Estate; (c) approve the Contingency Payment and authorize the Trustee to pay the 

same; (d) approve the Improvident Payment in an amount to be determined by the Court and 

authorize the Trustee to pay the same; and (e) provide such other relief as is just and proper.

DATED: May 18, 2022 Respectfully submitted,

/s/ Erika L. Morabito

Erika L. Morabito (VSB No. 44369)

Brittany J. Nelson (VSB No. 81734)

QUINN EMANUEL URQUHART & SULLIVAN 

1300 I Street, N.W., Suite 900

Washington, DC 20005

(202) 538-8334 (telephone)

Email: erikamorabito@quinnemanuel.com

brittanynelson@quinnemanuel.com

Special Counsel to Lynn L. Tavenner, Chapter 7 

Trustee

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CERTIFICATE OF SERVICE

I certify that on this 18th day of May 2022, a true copy of the foregoing Motion was filed 

under seal pending this Court’s ruling on the request by the United Lex Defendants to seal 

aspects of the 9019 Motion. Thereafter, the foregoing Motion will be served as provided in said 

ruling.

/s/ Erika L. Morabito

Erika L. Morabito

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