Order Approving Settlement and Compromise with Synergi Partners — In re JSmith Civil, LLC

Summary

Order Approving Settlement and Compromise with Synergi Partners, Inc., entered April 1, 2026, by the United States Bankruptcy Court for the Eastern District of North Carolina in JSmith Civil, LLC versus Synergi Partners, Inc., AP No. 25-00160-5-JNC. The order states that Synergi provided services related to Employee Retention Tax Credits under a Client Services Agreement dated May 20, 2022, and that on or about August 9, 2022 JSmith submitted a check to Synergi totaling $279,964.92. JSmith sued to avoid that Transfer and objected to Synergi's Proof of Claim, relying in part on a ruling that JSmith was not entitled to the Tax Credits, which JSmith has appealed. Under the approved settlement, Synergi pays $77,788.63 to JSmith and escrows $82,147.49 pending a Final Judgment in the IRS Adversary Proceeding.

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“Order Approving Settlement and Compromise with Synergi Partners — In re JSmith Civil, LLC.” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/17-order-approving-compromise-synergi-8419f386ff/, SHA-256 d1e5b0d18f62c3176ff910a128847509112ef9fe9372ee4e8d0a551a2ae57f49.

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Case 25-00160-5-JNC Doc 17 Filed 04/01/26 Entered 04/01/26 14:59:22 Page 1 of 7

SO ORDERED.

SIGNED this 1 day of April, 2026.

_____________________________________________
Joseph N. Callaway
United States Bankruptcy Judge
___________________________________________________________________

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,
AP NO. 25-00160-5-JNC
vs.

SYNERGI PARTNERS, INC.,

Defendant.

ORDER APPROVING SETTLEMENT AND
COMPROMISE WITH SYNERGI PARTNERS, INC.

THIS MATTER coming before the Court upon the Motion for Approval of

Settlement and Compromise with Synergi Partners, Inc. [BK D.E. 595; AP D.E. 13],

as modified, amended, and supplemented by the Amended Notice of Motion for

Approval of Settlement and Compromise with Synergi Partners, Inc. [BK D.E. 599;

AP D.E. 14], and the Supplement Motion for Approval of Settlement and
Case 25-00160-5-JNC Doc 17 Filed 04/01/26 Entered 04/01/26 14:59:22 Page 2 of 7

Compromise with Synergi Partners, Inc. [BK D.E. 600; AP D.E. 15] (collectively, the

“Settlement Motion”) filed by Debtor-Plaintiff JSMITH CIVIL, LLC (“JSmith”),

seeking approval of the settlement and compromise reached with Defendant

SYNERGI PARTNERS, INC. (“Synergi”) (JSmith and Synergi are collectively

referred to herein as, the “Parties” and individually as, “Party”), regarding the

claims for relief asserted in the above-captioned adversary proceeding.

The Parties desire to fully compromise, finally settle, and fully release all

claims, disputes and differences against one another and have a Synergi agreed to

resolve this matter as set forth herein. The entry of this Order, however, constitutes

neither a retraction by JSmith of any claims made against Synergi nor an

admission of any liability and/or any wrongdoing by either.

Based upon the record, and based upon the agreement reached between the

Parties, the Court makes the following FINDINGS OF FACT and

CONCLUSIONS OF LAW:

1. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§

157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Likewise,

this Court possesses the authority to hear and adjudicate this matter pursuant to

the General Order of Reference entered by the United States District Court for the

Eastern District of North Carolina on August 3, 1984.

2. JSmith, a limited liability company organized and existing under the

laws of the State of North Carolina, filed a voluntary petition with the United

States Bankruptcy Court for the Eastern District of North Carolina (the

2
Case 25-00160-5-JNC Doc 17 Filed 04/01/26 Entered 04/01/26 14:59:22 Page 3 of 7

“Bankruptcy Court”) seeking relief under chapter 11 of the Bankruptcy Code on

September 19, 2023 (the “Petition Date”), BK Case No. 23-02734-5-JNC (the

“Bankruptcy Case”).

3. Prior to the commencement of the Bankruptcy Case, Synergi and

JSmith 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 Credits (the “Tax

Credits”) allowed by the Coronovirus Aid Relief and Economic Stimulus Act.

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”). Additionally, pursuant to the

Agreement, Synergi provided its services for an affiliate of JSmith, JSE

Enterprises, LLC (“JSE”), and invoiced JSE for fees due totaling $155,307.26 (“JSE

Fees”) via the Invoices.

4. On or about August 9, 2022, JSmith 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.

5. Following the filing of the Bankruptcy Case, Synergi filed a proof of

claim number 52 (the “Proof of Claim”) for the Remaining Balance.

6. On September 12, 2025, JSmith commenced an adversary proceeding

against Synergi with the Bankruptcy Court, Adv. Pro. No. 25-00160-5-JNC (the

3
Case 25-00160-5-JNC Doc 17 Filed 04/01/26 Entered 04/01/26 14:59:22 Page 4 of 7

“Adversary Proceeding”), by and through the filing of a Complaint [D.E. 1], alleging

that the Transfer was avoidable under the 11 U.S.C. §§ 544 and 548; N.C. Gen.

Stat. § 39-23.1 et seq., as well as claims for Recovery and Preservation for the

Benefit of the Estate pursuant to 11 U.S.C. § 550.

7. On November 3, 2025, JSmith 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.

8. Synergi denies all of the allegations contained in the Adversary

Proceeding and opposes the relief in the Claim Objection.

9. 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,

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 JSmith was not entitled to the Tax Credits.

10. JSmith 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.

11. Following commencement of the Adversary Proceeding, the Parties

engaged in negotiations and settlement discussions, which culminated in a

resolution of the issues and controversies in the Adversary Proceeding and the

4
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Claim Objection, including any and all of which have been, or could have been,

asserted by and against the Parties (collectively, the “Claims”), memorialized in the

Settlement Agreement and Release of Claims (the “Settlement Agreement”), a fully-

executed copy of which was attached to the Settlement Motion as Exhibit 1 and is

incorporated herein by reference.1

12. Based upon the foregoing, and the record in the Bankruptcy Case and

the Adversary Proceeding, the settlement and resolution memorialized in the

Settlement Agreement is a sound exercise of the business judgment of JSmith, and

is otherwise in the best interests of the JSmith, the bankruptcy estate, creditors,

and parties interest, and should be approved pursuant to Fed. R. Bankr. P. 9019.

NOW THEREFORE, based on the foregoing, including the agreement of the

Parties memorialized in the Settlement Agreement, IT IS HEREBY ORDERED,

ADJUDGED, and DECREED as follows:

1. The Settlement Motion is GRANTED and the compromise and

settlement with Synergi memorialized in the Settlement Motion and accompanying

Settlement Agreement, is hereby APPROVED.

2. Within fifteen (15) calendar days of the entry of this Order, 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,” and delivered to Buckmiller & Frost, PLLC, Attn: Joseph Z. Frost,

Esq., 4700 Six Forks Road, Suite 150, Raleigh, NC 27609. Synergi shall be entitled

1 All capitalized terms used herein that are not otherwise defined shall have the

5
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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.

3. Within fifteen (15) calendar days of the entry of this Order, 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 Settlement Funds shall be disbursed solely in accordance with

Section 2.2.2 of the Settlement Agreement upon the entry of a Final Judgment in

the IRS Adversary Proceeding. Further, Synergi’s Proof of Claim shall be allowed

as a nonpriority unsecured claim in an amount equal to the fee due for the Allocated

Amount of the allowed Tax Credits.

4. Within ten (10) days following payment of the JSE Settlement Amount

and JSC Settlement Funds, JSmith shall draft, prepare, and file any motions,

stipulations, and any other papers or instruments necessary to effectuate a

voluntary dismissal of all the Claims against Synergi set forth in the Complaint and

in the Adversary Proceeding, with prejudice, with the Parties bearing their own

costs and expenses, including attorneys’ fees.

5. The Parties shall be authorized to execute any and all formal

documents and undertake any additional measures in order to implement the terms

and provisions of this Order, which will formalize the settlement and resolution of

meaning set forth in the Settlement Agreement.

6
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the Adversary Proceeding and provide the Parties with the requisite releases of any

and all claims they may have against one another in the Adversary Proceeding.

6. The Court shall retain jurisdiction to interpret, construe, enforce, or

resolve any disputes or controversies arising from or related to, this Order and the

Settlement Agreement executed by the Parties.

END OF DOCUMENT

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