Motion for Approval of Settlement with Synergi Partners — In re JSmith Civil, LLC
Summary
A Motion for Approval of Settlement and Compromise with Synergi Partners, Inc., filed February 24, 2026 as Doc 13 by debtor JSmith Civil, LLC in JSmith Civil, LLC versus Synergi Partners, Inc., Adv No. 25-00160-5-JNC, in the United States Bankruptcy Court for the Eastern District of North Carolina, Chapter 11 Case No. 23-02734-5-JNC. It states that JSmith sued Synergi to avoid a $279,964.92 check paid for Employee Retention Tax Credit services and objected to Synergi's proof of claim, while JSmith's appeal on its entitlement to the Tax Credits remains pending. Under the proposed settlement Synergi would pay $77,788.63 and escrow $82,147.49 pending a Final Judgment, and the adversary proceeding would be dismissed with prejudice. A notice sets an objection deadline of March 20, 2026; the motion is signed by Joseph Z. Frost.
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“Motion for Approval of Settlement with Synergi Partners — In re JSmith Civil, LLC.”
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Case 25-00160-5-JNC Doc 13 Filed 02/24/26 Entered 02/24/26 23:55:23 Page 1 of 12
4UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
NEW BERN DIVISION
IN RE:
JSMITH CIVIL, LLC, CASE NO. 23-02734-5-JNC
CHAPTER 11
DEBTOR.
JSMITH CIVIL, LLC,
Plaintiff,
vs. ADV NO. 25-00160-5-JNC
SYNERGI PARTNERS, INC.,
Defendant.
MOTION FOR APPROVAL OF SETTLEMENT
AND COMPROMISE WITH SYNERGI PARTNERS, INC.
NOW COMES the Debtor JSMITH CIVIL, LLC (“JSmith” or “Debtor” ) by
and through undersigned counsel of record and pursuant to § 105(a) of the
Bankruptcy Code and Federal Rule of Bankruptcy Procedure 9019, and hereby
respectfully move this Court for entry of an Order allowing and approving the
settlement and compromise reached with Defendant SYNERGI PARTNERS, INC.
(“Synergi”) (the Debtor and Synergi are collectively referred to herein as, the
“Parties” and individually as, “Party”). In support hereof, the Debtor shows unto
the Court as follows:
Case 25-00160-5-JNC Doc 13 Filed 02/24/26 Entered 02/24/26 23:55:23 Page 2 of 12
JURISDICTION AND AUTHORITY
1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§
1334, 151, and 157, as it (a) arises in, and concerns, matters affecting the
administration of bankruptcy estate in the above-captioned case that was
commenced by the Debtor, see id. §157(b)(2)(A), (b) concerns the allowance or
disallowance of claims against the bankruptcy estate, see id. § 157(b)(2)(B), (c) seeks
an Order approving the sale, conveyance, or transfer of property of the estate, see
id. § 157(b)(2)(N), and (d) concerns rights duly established under the Bankruptcy
Code. Accordingly, the relief sought herein constitutes a “core proceeding,”
pursuant to 28 U.S.C. § 157(b)(2).
2. The Court, likewise, has the authority to hear this matter under the
Standing Order of Reference entered by the United States District Court for the
Eastern District of North Carolina on August 3, 1984.
FACTUAL BACKGROUND
3. The Debtor, a limited liability company organized and existing under
the laws of the State of North Carolina, filed a voluntary petition seeking relief
under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court
for the Eastern District of North Carolina (the “Bankruptcy Court”) on September
19, 2023, BK Case No. 23-02734-5-JNC (the “Bankruptcy Case”).
4. Synergi and the Debtor entered into a Client Services Agreement
dated May 20, 2022 (the “Agreement”), pursuant to which Synergi provided services
related to identification and determination of eligibility for Employee Retention Tax
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Credits (the “Tax Credits”) allowed by the Coronavirus Aid Relief and Economic
Stimulus Act.
5. Pursuant to the terms of the Agreement, Synergi invoiced JSmith for
fees due totaling $404,352.58 (“JSmith Fees”), via Invoices number 1918765,
1918766, 1919276, and 1919277 (collectively the “Invoices”).
6. Synergi also provided its services under the Agreement for an affiliate
of the Debtor, JSE Enterprises, LLC (“JSE”), and invoiced JSE for fees due totaling
$155,307.26 (the “JSE Fees”) via the Invoices.
7. On or about August 9, 2022, the Debtor submitted a check to Synergi
totaling $279,964.92 (the “Transfer”), of which $202,176.29 was for JSmith Fees and
$77,788.63 was for JSE Fees, leaving $279,964.92 as the balance (the “Remaining
Balance”) owed on the Invoices.
8. Following the filing of the Bankruptcy Case, Synergi filed a proof of
claim number 52 (the “Proof of Claim”) for the Remaining Balance.
9. The Debtor commenced an adversary proceeding against Synergi, Adv.
No. 25-00160-5-JNC (the “Adversary Proceeding”), alleging that the Transfer was
avoidable under the Bankruptcy Code.
10. On November 3, 2025, the Debtor also filed an Objection to the Proof of
Claim, submitted by Synergi (the “Claim Objection”), alleging that Synergi’s Proof
of Claim for the Remaining Balance should be disallowed.
11. Both the Adversary and the Claim Objection are based, in part, on a
determination by an Order on Motion for Summary Judgment entered on August 8,
3
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2025, and its accompanying Memorandum Opinion on Order Granting Summary
Judgment entered on August 22, 2025 (collectively the “Order”), filed in a separate
adversary proceeding, JSmith Civil, LLC vs. United States of America, Adversary
Proceeding 24-00004-5 (the “IRS Adversary Proceeding”), in which this Court
determined that the Debtor was not entitled to the Tax Credits.
12. The Debtor timely filed an appeal of the Order to the United States
District Court, Eastern District of North Carolina, No. 5:25-cv-00513-D (the
“Appeal”), which remains pending.
13. Following, the commencement of the Adversary Proceeding, the
Parties agreed to resolve all disputes between them, which culminated in a
resolution of the issues and controversies forming the basis of the Adversary
Proceeding and Claim Objection, and is memorialized in the Settlement Agreement
and Release of Claims (the “Settlement Agreement”), a copy of which is attached
hereto as EXHIBIT 1 and incorporated herein by reference.1
SUMMARY OF SETTLEMENT AND RELIEF REQUESTED
14. The Parties, have resolved all issues in dispute, including any and all
relief and remedies pursuant to the Settlement Agreement, in exchange for the
following:
A. Settlement Payments: Within fifteen (15) calendar days of the
entry of an Order approving the 9019 Motion and the terms and
provisions of this Settlement Agreement (the “Settlement Order”);
1 The Debtor shall supplement this Motion for Approval of Settlement and
Compromise with Synergi Partners, Inc. (the “Settlement Motion”) with fully-
executed copy of the Settlement Agreement and Release of Claims upon receipt.
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(i) Synergi shall pay $77,788.63 (the “JSE Settlement
Amount”) to JSmith. The JSE Settlement Amount shall
be made payable to “Buckmiller & Frost, PLLC IOLTA
Trust Account,” (“Payee”), and delivered to Buckmiller &
Frost, PLLC, Attn: Joseph Z. Frost, Esq., 4700 Six Forks
Road, Suite 150, Raleigh, NC 27609.
(ii) Synergi shall escrow a total of Eighty-Two Thousand One
Hundred Forty-Seven and 49/100 Dollars ($82,147.49)
(the “JSC Settlement Funds”) with Haynsworth Sinkler
Boyd, P.A. (“HSB”) to be held in HSB’s trust account in
accordance with this Settlement Agreement. The JSC
Settlement Funds shall be disbursed solely in accordance
with Section 2.2.2 of the Settlement Agreement upon the
entry of a Final Judgment (defined below) in the IRS
Adversary Proceeding:
(1) Final Judgment Defined. “Final Judgment”
shall mean the ultimate determination of the issue
of entitlement to the Tax Credits. A Final
Judgment is one as to which (a) all appeals in the
IRS Adversary Proceeding have been exhausted or
the time for taking any further appeal or seeking
rehearing, reconsideration, or review has expired
without being timely invoked, or (b) any further
appeal or review of the IRS Adversary Proceeding
has been waived, dismissed, or is otherwise
procedurally barred, such that the determination is
no longer subject to further judicial review.
(2) Disbursement of Settlement Funds. The JSC
Settlement Funds shall be disbursed in accordance
with Section 2.2.2 of the Agreement through one of
the three (3) alternatives upon the entry of a Final
Judgment in the IRS Adversary Proceeding:
ALTERNATIVE 1: Upon entry of a Final Judgment
in the IRS Adversary Proceeding determining that
the Debtor is entitled to the Tax Credits in full,
HSB shall disburse the JSC Settlement Funds to
Synergi. Further, the Proof of Claim shall be
allowed in an amount of $202,176.29.
ALTERNATIVE 2: Upon entry of a Final Judgment
in the IRS Adversary Proceeding determining that
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the Debtor is not entitled to any Tax Credits, then
HSB shall disburse all JSC Settlement Funds to
Payee. Further, the entire Proof of Claim shall be
disallowed.
ALTERNATIVE 3: Upon entry of a Final Judgment
in the IRS Adversary Proceeding determining that
that the Debtor is entitled to only a portion of the
Tax Credits, the sum of JSC Settlement Funds
shall be allocated between Synergi and the Debtor
in proportion to the percentage of the Tax Credits
allowed versus disallowed as determined by the
Final Judgment (the “Allocated Amounts”), and
HSB shall disburse such Allocated Amounts from
the Settlement Funds to Synergi and to Payee for
the Debtor. Further, the Proof of Claim shall be
allowed in an amount equal to the fee due for the
Allocated Amount of the allowed Tax Credits.
B. Claim Under 11 U.S.C. 502. Synergi shall be entitled to file a
proof of claim under 11 U.S.C. § 502(h) of the Bankruptcy Code in
the Bankruptcy Case, as a nonpriority unsecured claim, for the JSE
Settlement Amount tendered under the Settlement Agreement.
C. Mutual Releases and Dismissal. The Parties mutually release
one another for all claims related to the Adversary Proceeding and
the Claim Objection. The Adversary Proceeding will also be
dismissed with prejudice.
15. By and through this Motion for Approval of Settlement and
Compromise with Synergi Partners, Inc. (the “Settlement Motion”) and in
accordance with Federal Rule of Bankruptcy Procedure 9019(a), the Debtor
respectfully requests that the Court enter an Order approving the settlement and
compromise outlined in the attached Settlement Agreement, and further
authorizing them to undertake and otherwise engage in any and all actions
necessary to effectuate and consummate the terms of the attached Settlement
Agreement.
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BASIS FOR RELIEF REQUESTED
16. Section 105(a) of the Bankruptcy Code authorizes the court to “issue
any order, process, or judgment that is necessary or appropriate to carry out the
provisions of this title.” 11 U.S.C. § 105(a); see Momentum Mfg. Corp. v. Employee
Creditors Comm. (In re Momentum Mfg. Corp.), 25 F.3d 1132, 1136 (2d Cir. 1994)
(“It is well settled that bankruptcy courts are courts of equity, empowered to invoke
equitable principles to achieve fairness and justice in the reorganization process.”).
17. Rule 9019(a) provides that “[o]n the motion by the trustee and after
notice and a hearing, the court may approve a compromise or settlement.” Fed. R.
Bankr. P. 9019(a); 11 U.S.C. § 105(a). In determining whether to approve a
proposed compromise, the court must evaluate whether it is fair, equitable, and in
the best interests of the estate and its creditors. See, e.g., Protective Comm. of
Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414 (1968); In re
MQVP, Inc., No. 10-2225, 2012 WL 1233019, at *3 (6th Cir. Apr. 13, 2012)
(unpublished) (“When determining whether to approve a proposed settlement . . .
the bankruptcy court is charged with an affirmative obligation to apprise itself of
the underlying facts and to make an independent judgment as to whether the
compromise is fair and equitable.” (citation and internal quotation marks omitted);
accord In re Cajun Elec. Power Coop., Inc., 119 F.3d 349, 355 (5th Cir. 1997)
(“Approval should only be given if the settlement is fair and equitable and in the
best interest of the estate.” (internal quotations omitted)). A compromise must be
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approved if it is the result of “an adequate and intelligent consideration of the
merits of the claims, the difficulties of pursuing them, the potential harm to the
debtor's estate caused by delay, and the fairness of the terms of the settlement.”
Anderson, 390 U.S. at 434.
18. The terms and conditions of the settlement and compromise reached
between the Parties, memorialized in the Settlement Agreement (including the
mutual release of any claims between the Parties), should be approved by the Court
pursuant to Fed. R. Bankr. P. 9019 because the compromise reached, and reflected
and embodied in the Settlement Agreement, is fair, equitable, and in the best
interests of JSmith, the bankruptcy estate, creditors and parties in interest. The
terms and provisions of the Settlement Agreement are the result of arms-length
negotiations between the Parties and, with respect to JSmith, represent a sound
exercise of its business judgment and are otherwise consistent with the
responsibilities and duties that were bestowed to it.
19. The Debtor was represented by experienced counsel and the terms of
the Settlement Agreement are the product of their collective judgment, experience,
and skill. Additionally, Synergi was represented by experienced counsel, who
regularly represents entities and creditors in connection with bankruptcy-related
matters, including the defense of actions for avoidance and recovery of preferential
and fraudulent transfers, who—with this experience—was familiar with the issues
involved in the Bankruptcy Case, as well as the potential exposure of, and possible
defenses, that could be asserted in the Adversary Proceeding. As a result, the terms
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and provisions of the Settlement Agreement represent a fair, informed, and
equitable compromise and resolution for the Parties involved.
20. The substantial benefits to the Debtor, the bankruptcy estate,
creditors, and parties in interest, clearly outweigh any potential costs resulting
from the settlement and compromise.
21. Had the Parties not agreed to the terms and conditions set forth in the
Settlement Agreement and not compromised the dispute between them, the Parties
would be forced to conduct additional and extensive discovery and analysis of the
Transfer that was being attacked by JSmith and participate in a trial in the
Adversary Proceeding. Further, because the outcome of the Appeal directly affects
the merits of the Claim Objection and the Adversary Proceeding, tying the terms of
the Settlement Agreement to the outcome of the Appeal is efficient and completely
resolves all issues between the Parties, which is clearly in the best interests of the
Debtor, the bankruptcy estate, parties in interest, and all creditors.
22. After consideration of the facts and circumstances of this matter, the
Debtor believes that a compromise and settlement of this matter upon the terms
proposed, is in the best interests of the Debtor, the bankruptcy estate, and creditors.
CONCLUSION
WHEREFORE, and based on the foregoing, the Debtor respectfully requests
the entry of an Order providing the following relief:
1. Approving the compromise and settlement reached between the
Parties, memorialized in the Settlement Agreement attached hereto;
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12
2. Authorizing the Debtor to undertake any and all actions necessary to
effectuate the settlement and resolution with Synergi, including consummation of
the Settlement Agreement;
3. Affording such further relief as the Court deems just and proper.
Respectfully submitted this, 24th day of February, 2026.
BUCKMILLER & FROST, PLLC
BY: s/ Joseph Z. Frost
JOSEPH Z. FROST, NCSB No. 44387
jfrost@bbflawfirm.com
4700 Six Forks Road, Suite 150
Telephone: 919.296.5040
Telefax: 919.977.7101
Counsel for Debtor-Plaintiff JSmith Civil, LLC
10
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UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
NEW BERN DIVISION
IN RE:
JSMITH CIVIL, LLC, CASE NO. 23-02734-5-JNC
CHAPTER 11
DEBTOR.
JSMITH CIVIL, LLC,
Plaintiff,
vs. AP NO. 25-00160-5-JNC
SYNERGI PARTNERS, INC.,
Defendant.
NOTICE OF MOTION FOR APPROVAL OF SETTLEMENT AND
COMPROMISE WITH SYNERGI PARTNERS, INC.
NOTICE IS HEREBY GIVEN of the MOTION FOR APPROVAL OF SETTLEMENT
AND COMPROMISE WITH SYNERGI PARTNERS, INC (the “Settlement Motion”)
filed by JSMITH CIVIL, LLC. (“Debtor” or “JSmith”) through their undersigned
counsel, in the above-captioned case for the purpose of supplying all creditors and
parties-in-interest with information reasonably calculated to allow an informed decision
as to whether to support, object or abstain to the Settlement Motion, regarding approval
of the settlement and compromise reached with SYNERGI PARTNERS, INC. (“Synergi”)
(the Debtor and Synergi are collectively referred to herein as, the “Parties”).
THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT
OF NORTH CAROLINA (THE “BANKRUPTCY COURT”) HAS NOT REVIEWED
THE INFORMATION PROVIDED IN THIS NOTICE OR THE SETTLEMENT
MOTION AND HAS NOT OFFERED AN OPINION AS TO ITS ACCURACY,
SUFFICIENCY OR COMPLETENESS. IT IS ANTICIPATED THAT THE
BANKRUPTCY COURT MAY REVIEW THE DISCLOSURES MADE HEREIN AT
THE HEARING IN CONSIDERATION OF THE MOTION. THE PURPOSE OF
THIS NOTICE IS TO PROVIDE CREDITORS WITH INFORMATION
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CONCERNING THE DEBTOR, THE PLAN TRUSTEE, AND THE PROPOSED
SETTLEMENT IN ADVANCE THEREOF. THE DEBTOR AND THE PLAN
TRUSTEE, THROUGH COUNSEL, WILL ATTEMPT TO RESPOND TO ALL
REASONABLE INQUIRIES CONCERNING THE INFORMATION PROVIDED
HEREIN. PARTIES IN INTEREST ARE ENCOURAGED TO SEEK THE ADVICE
OF COUNSEL TO FULLY DETERMINE THEIR RIGHTS WITH RESPECT TO
THE PROPOSED SETTLEMENT CONTEMPLATED HEREIN.
FURTHER NOTICE IS HEREBY GIVEN that any objection to the Settlement Motion
may be filed with the Clerk, United States Bankruptcy Court for the Eastern District of
North Carolina (the “Bankruptcy Court”), with a copy served on the counsel for the
Debtor, on or before MARCH 20, 2026 (the “Response/Objection Deadline”), and, if any
such objections or responses are filed, a hearing will be conducted on this Notice,
Settlement Motion, and any response thereto to be scheduled by the Bankruptcy Court.
Any party objecting, responding, or requesting a hearing, shall appear at said hearing in
support of such request or they may be assessed Court costs. If no request for a hearing
is timely filed, the Court may rule on this Notice, the Settlement Motion and any
response(s) or objection(s) thereto ex parte without further notice.
Respectfully submitted, this the 24th day of February 2026.
BUCKMILLER & FROST, PLLC
JOSEPH Z. FROST, NCSB No. 44387
jfrost@bbflawfirm.com
4700 Six Forks Road, Suite 150
Telephone: 919.296.5040
Telefax: 919.977.7101
Counsel for Debtor-Plaintiff JSmith Civil, LLC
12
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