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IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
In re: ) Chapter 11 ) CANOPY FINANCIAL, INC., ) Case No. 09-44943 ) Debtor. ) Hon. Eugene R. Wedoff
APPLICATION OF DEBTOR AND DEBTOR-IN-POSSESSION FOR ORDER AUTHORIZING EMPLOYMENT AND RETENTION OF JENNER & BLOCK LLP AS ATTORNEYS FOR DEBTOR PURSUANT TO SECTION 327(A) OF THE BANKRUPTCY CODE AND RULE 2014 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE
Canopy Financial, Inc., the above captioned debtor and debtor-in-possession (“Canopy”
or the “Debtor”), hereby applies (the “Application”) for entry of an order, substantially in the
form attached hereto as Exhibit A, under sections 327(a), 329, and 331 of title 11 of the United
States Code (the “Bankruptcy Code”) and Rules 2014 and 2016 of the Federal Rules of
Bankruptcy Procedure (the “Bankruptcy Rules”) authorizing the Debtor’s retention and
employment of Jenner & Block LLP (“Jenner & Block”), nunc pro tunc to the Petition Date
(defined below) as the Debtor’s bankruptcy counsel. In further support of this Application, the
Debtor relies on the Declaration of Vincent E. Lazar in Support of the Application of Debtor and
Debtor in Possession for Order Authorizing Employment and Retention of Jenner & Block LLP
as Attorneys for Debtor Pursuant to Section 327(a) of the Bankruptcy Code and Rule 2014 of the
Federal Rules of Bankruptcy Procedure (the “Lazar Declaration”), which is submitted
concurrently with the Application. In support of this Application, the Debtor respectfully
represents as follows:
Jurisdiction
1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and
1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2).
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2. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.
3. The statutory predicates for the relief sought herein are sections 327(a), 329, and
331 of the Bankruptcy Code and Rules 2014 and 2016 of the Bankruptcy Rules.
Background
4. On November 25, 2009 (the “Petition Date”), the Debtor commenced this case by
filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code. No creditors’ committee has yet been appointed in this case by the United States Trustee.
5. As of the Petition Date, the Debtor operated as a provider of health insurance- related online banking interfaces and processing services, supporting thousands of consumer- driven healthcare accounts and processing thousands of healthcare related payments annually.
The Debtor’s flagship products, HealthDirect® and CareGain®, are among the leading technology-enabled electronic payment, account management, and investment technology platforms for health savings accounts, flexible spending accounts, and health reimbursement arrangements. The Debtor’s products incorporate plan design, expense tracking, integrated investment trading, online bill payment, ACH processing, card management systems, account management, customer service interfaces, and plan advisory capabilities -- all specifically for healthcare. The Debtor maintains physical offices in Chicago, Illinois; San Francisco,
California; and Plainsboro, New Jersey.
6. On October 31, 2007, the Debtor entered into a Loan and Security Agreement
(the “2007 Loan Agreement”) with Venture Lending & Leasing IV, Inc. and Venture Lending &
Leasing V, Inc. (collectively, the “Prepetition Lenders”) and on May 28, 2009, the Debtor entered into a Loan and Security Agreement (together with the 2007 Loan Agreement, the “Loan
Agreements”) with Venture Lending & Leasing V, Inc. Pursuant to the Loan Agreements, the
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Prepetition Lenders agreed to make periodic term loans to the Debtor. As collateral for the
loans, among other personal property and assets, the Debtor granted the Prepetition Lenders a
security interest in certain of the Debtor’s bank accounts (collectively, the “Pledged Accounts”).
The Debtor, the Prepetition Lenders, and the banks also executed Account Control Agreements.
Pursuant to the Loan Agreements and the Account Control Agreements, upon the occurrence of certain events, the Prepetition Lenders are authorized, upon proper notice, to exercise exclusive control over the Pledged Accounts.
7. On July 15, 2009 and August 19, 2009, the Debtor raised an aggregate of
$74,999,995.65 by issuing Series D Preferred Stock to entities affiliated with a group of private equity investors. Of that amount, $39,321,230.77 was used by the Debtor to repurchase shares of its Common Stock, Series A Preferred Stock and Series B Preferred Stock from certain existing stockholders of the Debtor, and the remaining funds were intended to be used by the Debtor for working capital and general corporate purposes.
8. Earlier this month, the Debtor discovered that financial statements provided to, inter alia, its investors and the Prepetition Lenders were fraudulent, and also uncovered other significant financial and accounting irregularities. Upon this discovery, the Debtor’s board of directors formed a special committee of outside directors who, along with independent legal counsel and forensic accountants, have been conducting an investigation into this matter. The two officers of the Debtor implicated in the fraud were removed from management and placed on unpaid leave (one subsequently resigned and the other’s employment was terminated by the
Debtor), and they have had no involvement or participation in the Debtor’s business since that time. The special committee also notified the appropriate authorities, and the Debtor has been fully cooperating with them.
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9. The Debtor has notified the Prepetition Lenders and certain of its customers that
it believes that the inaccuracy of financial statements and other significant financial and
accounting irregularities constituted a material adverse change under the Loan Agreements and
certain customer agreements. In response to this notice, on November 17, 2009, the Prepetition
Lenders, purporting to act pursuant to an Account Control Agreement, exercised control over
one of the Debtor’s bank accounts that was a Pledged Account and transferred to themselves
from that account $5,472,812.61, the then-outstanding indebtedness to the Prepetition Lenders.
The Debtor also has received termination notices from certain of its customers.
10. On November 19, 2009, the Debtor reduced the number of its employees from
123 full-time employees to 31 full-time employees, and has also taken other measures to preserve its remaining assets and business.
11. The Debtor’s board of directors has determined that a bankruptcy filing is necessary to preserve the value of the Debtor’s business and assets so that it can explore a restructuring, sale or other business alternatives. In the interim, the Debtor continues to operate its business and to service all of its customers’ accounts.
Relief Requested
12. By this Application, the Debtor seeks to employ and retain Jenner & Block as of the Petition Date to represent the Debtor as its bankruptcy counsel in connection with the
Debtor’s chapter 11 case. Accordingly, the Debtor respectfully requests entry of an order under
sections 327(a), 329, and 331 of the Bankruptcy Code, in substantially the form attached hereto
as Exhibit A, authorizing the Debtor to employ and retain Jenner & Block as its attorney to
perform the legal services that will be necessary during its chapter 11 case, as summarized
herein.
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Basis for Relief
13. The Debtor requires Jenner & Block to act as its counsel for insolvency and related matters, and to render legal services relating to the day-to-day administration of this chapter 11 case and the myriad of issues that may arise in this case, including, without limitation, the following services:
(a) advising the Debtor of its powers and duties as Debtor in possession;
(b) advising the Debtor regarding matters of bankruptcy law;
(c) representing the Debtor in proceedings and hearings in the United States District and Bankruptcy Courts for the Northern District of Illinois;
(d) preparing on behalf of the Debtor any necessary motions, applications, orders, and other legal papers;
(e) providing assistance, advice, and representation concerning any possible sale of the Debtor’s assets;
(f) providing assistance, advice, and representation concerning the confirmation of any proposed plan(s) and solicitation of any acceptances or responding to objections to such plan(s);
(g) providing assistance, advice and representation concerning any further investigation of the assets, liabilities, and financial condition of the Debtor that may be required under local, state, or federal law;
(h) prosecuting and defending litigation matters and such other matters that might arise during this chapter 11 case;
(i) providing counseling and representation with respect to assumption or rejection of executory contracts and leases, sales of assets, and other bankruptcy-related matters arising from this case;
(j) rendering advice with respect to general corporate and litigation issues relating to this case, including, but not limited to, securities, corporate finance, tax, and commercial matters; and
(k) performing such other legal services as may be necessary and appropriate for the efficient and economical administration of this chapter 11 case.
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It is necessary and essential that the Debtor, as a debtor-in-possession, employ Jenner & Block to render the foregoing professional services. Jenner & Block has assured the Debtor that it will take care not to duplicate the efforts of other professionals of the Debtor retained in this case.
14. The Debtor selected Jenner & Block because its attorneys have extensive experience, knowledge, and resources in the area of debtor and creditor rights, and in addition to a national bankruptcy practice, have extensive experience with the bankruptcy courts in various jurisdictions. Jenner & Block also has the ability to commit substantial resources to legal problems on an urgent basis. The Debtor therefore believes that Jenner & Block is well qualified to represent it in this chapter 11 case and requests that the Court approve such retention.
15. In assisting the Debtor with the filing of this bankruptcy case Jenner & Block’s attorneys have become familiar with the complex factual and legal issues that will have to be addressed in this case. The retention of Jenner & Block, with its knowledge of the Debtor and the procedures and requirements of various bankruptcy courts, will assist in the efficient administration of the Debtor’s estate thereby minimizing the expense to the Debtor’s estate.
Disinterestedness of Jenner & Block
16. Based upon the Lazar Declaration, and except as set forth therein, the Debtor believes that Jenner & Block’s partners, counsel, and associates do not hold or represent any interest adverse to the Debtor, and that Jenner & Block and each of its partners, counsel, and associates is a “disinterested person” within the meaning of section 101(14) of the Bankruptcy
Code.
17. Based upon the Lazar Declaration, and except as set forth therein, the Debtor believes that Jenner & Block’s partners, counsel, and associates have no connection with the
Debtor, the Debtor’s directors and executive management, the Debtor’s other professionals, the
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Debtor’s major shareholders, the Debtor’s major unsecured creditors, the judges of the United
States Bankruptcy Court for the Northern District of Illinois, the United States Trustee (Region
11), and the Assistant Trustees and Trial Attorneys for the office of the United States Trustee.
18. To the best of the Debtor’s knowledge and except as set forth in the Lazar
Declaration:
(a) Neither Jenner & Block nor any attorney at the Firm holds or represents an interest adverse to the Debtor’s estate.
(b) Neither Jenner & Block nor any attorney at the Firm is or was a creditor or an insider of the Debtor, except that Jenner & Block has rendered legal services to the Debtor for which it has been compensated as disclosed below.
(c) Neither Jenner & Block nor any attorney at the Firm is or was, within two years before the Petition Date, a director, officer, or employee of the Debtor.
(d) Jenner & Block does not have an interest materially adverse to the interest of the estate of any class of creditors or equity holders by reason of any direct or indirect relationship to, connection with, or interest in the Debtor, or for any other reason.
19. In view of the foregoing, the Debtor believes that Jenner & Block is a
“disinterested person” within the meaning of Bankruptcy Code section 101(14), as modified by
Bankruptcy Code section 1107(b).
20. Jenner & Block has informed the Debtor that throughout this case, Jenner &
Block will continue to conduct periodic conflicts analyses to determine whether it is performing or has performed services for any significant parties in interest in this case and that it will promptly update this Application and disclose any material developments regarding the Debtor or any other pertinent relationships that come to Jenner & Block’s attention by way of a supplemental Declaration.
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Professional Compensation
21. On November 20, 2009, Jenner & Block received a retainer of $150,000 (the
“Retainer”). Prior to the filing of the Debtor’s petition, Jenner & Block drew against and applied
$80,940.00 of the retainer for actual and estimated prepetition professional services and expenses charged by Jenner & Block. All such fees, charges, and disbursements are attributable to legal services performed, and charges and disbursements incurred, in contemplation of or in connection with the Debtor’s chapter 11 case. Jenner & Block will promptly issue a final billing statement (the “Final Billing Statement”) for actual fees, charges, and disbursements accrued prior to the Petition Date once all fees, charges, and disbursements accrued prior to the Petition
Date have been finally posted (the “Final Billed Amount”). To the extent that the amounts paid to Jenner & Block exceed the Final Billed Amount, such excess payment shall be returned to the retainer account held by Jenner & Block, and together with the Retainer shall form a postpetition retainer (the “Postpetition Retainer”) to pay any postpetition fees, charges, and disbursements in accordance with this Court’s Orders. To the extent that the amounts paid to Jenner & Block prepetition are not sufficient to satisfy the Final Billed Amount, Jenner & Block shall waive and release any claim based upon any remaining prepetition amounts owed.
22. During the course of the Debtor’s chapter 11 case, Jenner & Block will invoice the Debtor no less frequently than monthly for services rendered and charges and disbursements incurred. Such invoices will constitute a request for interim payments against the Firm’s reasonable fee to be determined at the conclusion of this case.
23. Jenner & Block will seek compensation for attorneys’ fees and paraprofessionals’ fees at its normal hourly billing rates in effect for the period in which such services are performed, and will seek reimbursement of necessary and reasonable out-of-pocket expenses in
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accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the
Local Rules for the United States Bankruptcy Court for the Northern District of Illinois (the
“Local Rules”) and Orders of this Court. Presently, the hourly rates for the professionals expected to work on this matter range from $525 to $800 for partners, $395 to $525 for counsel,
$395 to $535 for associates, $230 to $270 for paralegals, and $160 to $170 for project assistants.
The Debtor submits that such rates are reasonable and should be approved by the Court subject to a determination of the amount to be paid to Jenner & Block upon application for allowance.
24. Jenner & Block intends to apply to the Court for allowance of compensation for professional services rendered and reimbursement of expenses incurred in the Debtor’s chapter
11 case in accordance with applicable provisions of the Bankruptcy Code, the Federal Rules of
Bankruptcy Procedure, the Local Rules, and Orders of this Court.
25. Jenner & Block has agreed to accept as compensation such sums as may be allowed by the Court on the basis of the professional time spent, the rates charged for such services, the necessity of such services to the administration of the estates, the reasonableness of the time within which the services were performed in relation to the results achieved, and the complexity, importance, and nature of the problems, issues or tasks addressed in the Debtor’s chapter 11 case.
26. Other than as set forth above and in the Lazar Declaration, no arrangement is proposed between the Debtor and Jenner & Block for compensation to be paid in this case.
27. The Debtor submits that the engagement and retention of Jenner & Block on the terms and conditions set forth herein is necessary and in the best interest of the Debtor, its estate, and its creditors and should be approved.
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Notice
28. Notice of this Motion has been given to: (a) the Office of the United States
Trustee; (b) the Securities and Exchange Commission; (c) the Internal Revenue Service; (d) the
United States Attorney Office for the Northern District of Illinois; (e) the Prepetition Lenders;
and (f) the Debtor’s 20 largest unsecured creditors as set forth in the list filed with the Debtor’s
petition. In light of the relief requested, the Debtor submits that no further notice is required.
WHEREFORE, the Debtor respectfully requests that the Court grant the Application,
authorize the Debtor’s retention and employment of Jenner & Block nunc pro tunc to the Petition
Date pursuant to the terms and conditions set forth in the Application and related pleadings, and
grant such other and further relief that the Court deems just and proper.
Dated: November 27, 2009 Respectfully submitted,
CANOPY FINANCIAL, INC.
By: /s/ Vincent E. Lazar One of its attorneys
Vincent E. Lazar (6204916) Melissa M. Hinds (6288246) Landon S. Raiford (6297473) JENNER & BLOCK LLP 353 North Clark Street Chicago, IL 60654-3456 Telephone: 312-222-9350 Facsimile: 312-527-0484
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
In re: ) Chapter 11 ) CANOPY FINANCIAL, INC., ) Case No. 09-44943 ) Debtor. ) Hon. Eugene R. Wedoff
DECLARATION OF VINCENT E. LAZAR IN SUPPORT OF APPLICATION OF DEBTOR AND DEBTOR-IN-POSSESSION FOR ORDER AUTHORIZING EMPLOYMENT AND RETENTION OF JENNER & BLOCK LLP AS ATTORNEYS FOR DEBTOR PURSUANT TO SECTION 327(A) OF THE BANKRUPTCY CODE AND RULE 2014 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE
I, Vincent E. Lazar, pursuant to 28 U.S.C. § 1746, hereby declare that the following is
true to the best of my knowledge, information, and belief:
1. I am a partner of Jenner & Block LLP (“Jenner & Block” or the “Firm”), a law
firm with offices in Chicago, Illinois; New York, New York; Los Angeles, California; and
Washington D.C. I am currently resident in the Firm’s Chicago office. I am duly authorized
to make this Declaration on behalf of Jenner & Block.
2. I am duly licensed in and am a member in good standing of the bar for the State
of Illinois and am admitted to practice before the United States Courts of Appeals for the
Second, Fifth, and Seventh Circuits, and the United States District Courts for the Northern
District of Illinois.
3. I submit this Declaration in support of the application (the “Application”) of the
debtor and debtor-in-possession (the “Debtor”) in the above-captioned case (the “Chapter 11
Case”) pursuant to sections 327(a), 328(a), 329, and 504 of title 11 of the United States Code,
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as amended (the “Bankruptcy Code”), for entry of an order authorizing the employment and
retention of Jenner & Block as bankruptcy counsel for the Debtor.
Services to be Rendered
4. The Debtor selected Jenner & Block because its attorneys have extensive
experience, knowledge, and resources in the area of debtor and creditor rights, and in addition
to a national bankruptcy practice, have extensive experience with the bankruptcy courts in
various jurisdictions. Jenner & Block also has the ability to commit substantial resources to
legal problems on an urgent basis. The Debtor therefore believes that Jenner & Block is well
qualified to represent them in the Chapter 11 Case and requests that the Court approve such
retention.
5. The Debtor requires Jenner & Block to act as its counsel for insolvency and
related matters, and to render legal services relating to the day-to-day administration of the
Chapter 11 Case and the myriad of issues that may arise in this case, including, without
limitation, the following services:
a. advising the Debtor of its powers and duties as Debtor in possession;
b. advising the Debtor regarding matters of bankruptcy law;
c. representing the Debtor in proceedings and hearings in the United States District and Bankruptcy Courts for the Northern District of Illinois;
d. preparing on behalf of the Debtor any necessary motions, applications, orders, and other legal papers;
e. providing assistance, advice, and representation concerning any possible sale of the Debtor’s assets;
f. providing assistance, advice, and representation concerning the confirmation of any proposed plan(s) and solicitation of any acceptances or responding to objections to such plan(s);
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g. providing assistance, advice and representation concerning any further investigation of the assets, liabilities, and financial condition of the Debtor that may be required under local, state, or federal law;
h. prosecuting and defending litigation matters and such other matters that might arise during the Chapter 11 Case;
i. providing counseling and representation with respect to assumption or rejection of executory contracts and leases, sales of assets, and other bankruptcy-related matters arising from this case;
j. rendering advice with respect to general corporate and litigation issues relating to this case, including, but not limited to, securities, corporate finance, tax, and commercial matters; and
k. performing such other legal services as may be necessary and appropriate for the efficient and economical administration of the Chapter 11 Case.
6. Subject to this Court’s approval of the Application, Jenner & Block is willing to
serve as the Debtor’s counsel and to perform the services described above.
Jenner & Block’s Disclosure Procedures
7. In preparing this Declaration, I used a set of procedures developed by Jenner &
Block to ensure full compliance with the requirements of the Bankruptcy Code, the
Bankruptcy Rules, and any local rules of the Court regarding the retention of processionals by
a debtor under the Bankruptcy Code (the “Firm Disclosure Procedures”). Pursuant to the Firm
Disclosure Procedures, I performed, or caused to be performed, the following actions to
identify the parties relevant to this Declaration and to ascertain Jenner & Block’s connection
to such parties:
a. Using information provided by the Debtor, a list of the names of entities who may be parties in interest to the Chapter 11 Case (the “Identified Parties”) was assembled to create a Retention Checklist. The Retention Checklist is attached hereto as Exhibit 1 and is incorporated herein by reference. b. Jenner & Block entered the names of the Identified Parties into a computer database containing the names of all clients and conflict information concerning such clients of Jenner & Block. Through the information generated from this computer inquiry, and through follow-
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up inquiries with Jenner & Block attorneys, it was determined that Jenner & Block had represented no party adverse to the Debtor or the Debtor’s estate with respect to matters for which Jenner & Block is to be retained, except as identified below. None of Jenner & Block’s representations constitute a conflict with Jenner & Block’s representation of the Debtor or will likely create a conflict in the future. c. In addition, Jenner & Block generally maintains records confirming that none of Jenner & Block’s representatives are related to any Bankruptcy Judge for the Northern District of Illinois, the United States Trustee (Region 11), or any person employed by the United States Trustee (Region 11). Statement of Connections
8. I respectfully represent that neither the firm of Jenner & Block, any partner,
counsel, or associate thereof, nor I, insofar as I have been able to ascertain, is so connected
with any Bankruptcy Judge of the Northern District of Illinois, or the United States Trustee for
Region 11, the Assistant Trustees for Region 11 or the staff attorneys for Region 11, as to
render the appointment of Jenner & Block as counsel for the Debtor inappropriate under
Bankruptcy Rule 5002(b). Judge Eugene R. Wedoff is a former Jenner & Block partner. One
of Judge Wedoff’s current law clerks, David H. Hixson, is a former Jenner & Block associate.
The other connections Jenner & Block has been able to ascertain in this regard are: (a) Ronald
R. Peterson and Catherine L. Steege, both Jenner & Block partners, are members of the panel
of Chapter 7 trustees maintained by the United States Trustee for the Northern District of
Illinois; and (b) Daniel R. Murray, another Jenner & Block partner, served as Chapter 11
trustee in the Chicago Missouri & Western Railway bankruptcy proceeding by appointment of
the United States Trustee for the Northern District of Illinois from 1988 to 1997.
9. None of Jenner & Block, its partners, attorneys, or counsel are creditors, equity
security holders, or insiders of the Debtor. Jenner & Block maintains a strict policy
prohibiting any person at the Firm from disclosing confidential information, using it for
personal gain, or disclosing it to others for their personal gain. Moreover, the Firm’s attorneys
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and non-legal employees are prohibited from buying, selling, or otherwise trading or
recommending trading in stock or other securities of a client (or of a company involved in, or
a potential party to, a transaction with a client) on the basis of material, inside (non-public)
information.
10. None of Jenner & Block, its partners, attorneys, or counsel are or were within
two years before the Petition Date, a director, officer, or employee of the Debtor.
11. Except as described herein, neither the firm of Jenner & Block, any partner or
associate thereof, nor I, insofar as I have been able to ascertain, has an interest materially
adverse to the interest of the estate or of any class of creditors or equity security holders, by
reason of any direct or indirect relationship to, connection with, or interest in, the Debtor.
12. On the basis of the above, I believe the firm of Jenner & Block to be a
“disinterested person” within the meaning of section 101(14) of the Bankruptcy Code.
Jenner & Block’s Connections with Identified Parties in Matters Unrelated to the Chapter 11 Case
13. Relationships between Jenner & Block (on the one hand) and the Debtor and/or
its creditors (on the other hand), may have existed in past years and may exist in the future.
Except as otherwise set forth herein, any such contacts or relationships do not relate to the
Chapter 11 Case and thus do not create any conflicts with respect to Jenner & Block’s
representation of the Debtor. Jenner & Block is a very large law firm and as such, the Firm’s
conflict clearance procedures are understandably complex. Nonetheless, as of the date of this
Declaration, the Firm believes it has materially completed its investigation of its contacts with
the Chapter 11 Case, based on the information provided to Jenner & Block by the Debtor,
subject to its continuing duty to disclose any additional information that comes to light.
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14. Jenner & Block, its partners, counsel, and associates have represented in the
past, and may in the future represent, creditors of the Debtor and various other parties-in-
interest in the Chapter 11 Case with respect to matters in which the Debtor was or is adverse
but which were or are unrelated to anything fairly contemplated to be within the scope of
Jenner & Block’s retention.
15. In addition to the disclosures in this Declaration, Jenner & Block currently
represents the following Identified Parties, affiliates of the following Identified Parties, or
clients that have material relationships with the following Identified Parties, each of which are
creditors or parties in interest: (i) 230 Monroe Pt LLC (a General Electric Asset Management
affiliate); (ii) Blue Cross Blue Shield Association and related entities Blue Cross Blue Shield
of Michigan and HealthBenefit Bank (d/b/a Blue Healthcare Bank); (iii) Comcast;
(iv) Commonwealth Edison Corporation; (v) Dell Computer Corporation; (vi) General Electric
Capital Corporation (“GECC”); (vii) JP Morgan Chase Bank, N.A. as trustee for First Plaza
Group Trust for the sole benefit of Pool PMI-127 (General Motors Hourly); (viii) JP Morgan
Chase Bank, N.A. as trustee for First Plaza Group Trust for the sole benefit of Pool PMI-129
(General Motors Salaried); (ix) Pitney Bowes Global Financial Services; and (x) Wolters
Kluwer Financial Services. Jenner & Block has not and will not represent these entities in any
matters related to the Debtor, nor will it represent the Debtor in any matter directly adverse to
the interests of such entities.
16. With the exception of the Identified Parties listed in this paragraph, no single
Identified Party (including its respective subsidiaries and affiliates) referenced in this
Declaration and its exhibits accounted for more than 1% of Jenner & Block’s gross revenues
for the year ending December 31, 2008. Two of the Identified Parties, GECC and General
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Electric Asset Management (“GEAM”), including their respective subsidiaries and affiliates,
(collectively “GE”), accounted for more than 1%, but less than 5%, of the firm’s gross
revenues for the year ending December 31, 2008. The matters with respect to which Jenner &
Block represents GE are unrelated to the Chapter 11 Case and will not present any conflict of
interest or appearance of partiality.
17. I do not believe that any of these current or former restrictions constitute a
conflict with Jenner’s representation of the Debtor, not will likely create a conflict in the
future.
18. The aforementioned matters are subject to the same restrictions Jenner & Block
places on all such representations in the context of a chapter 11 debtor representation.
Without obtaining appropriate waivers, if necessary, Jenner & Block will not represent the
Debtor in a lawsuit, adversary proceeding or contested matter against any Identified Party
listed above or any other Firm client. In addition, Jenner & Block will not represent any client
on any matter involving the Debtor while retained as the Debtor’s counsel in the Chapter 11
Case.
19. While Jenner & Block has undertaken, and continues to undertake, extensive
efforts to identify connections with the Debtor and other parties in interest, it is possible that
connections with some parties in interest have not yet been identified. Should Jenner &
Block, through its continuing efforts, learn of any new connections of the nature discussed
herein, Jenner & Block will so advise the Court.
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Statement Under Section 504 of the Bankruptcy Code, and Rule 2016 of the Bankruptcy Rules
20. In accordance with section 504 of the Bankruptcy Code and Bankruptcy Rule
2016, I hereby state that neither I nor Jenner & Block has entered into any agreements, express
or implied, with any other party in interest, including the Debtor, any creditor, or any attorney
for such party in interest in the Chapter 11 Case: (a) for the purpose of sharing or fixing fees
or other compensation to be paid to any such party in interest or its attorneys for services
rendered in connection therewith; (b) for payment of such compensation from the assets of the
estates in excess of the compensation allowed by this Court pursuant to the applicable
provisions of the Bankruptcy Code; or (c) for payment of compensation in connection with
this case other than in accordance with the applicable provisions of the Bankruptcy Code.
21. Jenner & Block intends to apply to the Court for allowances of compensation
and reimbursement of expenses for professional services incurred on behalf of the Debtor in
accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the
Local Rules, the “United States Trustee Guidelines for Reviewing Applications for
Compensation and Reimbursement of Expenses Filed under 11 U.S.C. § 330” (the “United
States Trustee Fee Guidelines”), and all orders of this Court governing professional services
performed and expenses incurred. To that end, Jenner & Block has agreed to submit
applications for interim and/or final allowances of compensation pursuant to sections 330 and
331 of the Bankruptcy Code and the rules and orders of this Court. All of Jenner & Block’s
fees and expenses will be subject to Bankruptcy Court approval.
22. Jenner & Block has advised the Debtor that it will seek compensation for
attorneys’ fees and paraprofessionals’ fees at its normal hourly billing rates in effect for the
period in which such services are performed, and will seek reimbursement of necessary and
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reasonable out-of-pocket expenses in accordance with the applicable provisions of the
Bankruptcy Code, the Bankruptcy Rules, the Local Rules for the United States Bankruptcy
Court for the Northern District of Illinois (the “Local Rules”) and Orders of this Court.
Presently, the hourly rates for the professionals expected to work on this matter range from
$525 to $800 for partners, $395 to $525 for counsel, $395 to $535 for associates, $230 to $270
for paralegals, and $160 to $170 for project assistants.
23. On November 20, 2009, Jenner & Block received a retainer of $150,000 (the
“Retainer”). Prior to the filing of the Debtor’s petition, Jenner & Block drew against and
applied $80,940.00 of the retainer for actual and estimated pre-petition professional services
and expenses charged by Jenner & Block. All such fees, charges, and disbursements are
attributable to legal services performed, and charges and disbursements incurred, in
contemplation of or in connection with the Chapter 11 Case. Jenner & Block will promptly
issue a final billing statement (the “Final Billing Statement”) for actual fees, charges, and
disbursements accrued prior to the Petition Date once all fees, charges, and disbursements
accrued prior to the Petition Date have been finally posted (the “Final Billed Amount”). To
the extent that the amounts paid to Jenner & Block exceed the Final Billed Amount, such
excess payment shall be returned to the retainer account held by Jenner & Block, and together
with the Retainer shall form a postpetition retainer (the “Postpetition Retainer”) to pay any
postpetition fees, charges, and disbursements in accordance with this Court’s Orders.
24. Jenner & Block will request, subject to the Court’s approval, reimbursement for
all actual out-of-pocket expenses incurred by Jenner & Block on the Debtor’s behalf, such as
photocopying services, printing, delivery charges, filing fees, postage, travel expenses,
computer research time and other disbursements. All requests for reimbursement of expenses
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will be consistent with the United States Trustee Fee Guidelines and the requirements
established by this Court.
25. I have read the application of the Debtor for an order approving the retention of
Jenner & Block as attorneys for the Debtor that accompanies this Declaration and, to the best
of my knowledge, information and belief, the contents of said application and this Declaration
are true and correct.
I declare under penalty of perjury that the foregoing is true and correct.
Executed this 27th day of November, 2009.
/s/ Vincent E. Lazar Vincent E. Lazar
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Exhibit 1
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Debtor K. Robert Draughon Maneesha Prakash Canopy Financial Inc. Matthew Capell Matthew Kramer Lenders Max von Zuben Mohammed Yunus HTI On the Side Investments LLC Venture Lending & Leasing, IV Owen J. Leary Performance Direct Investments II, L.P. Current and Former Directors and Officers Peter Masucci Puressence Limited Anthona Banas RMT Holdings LLC Daniel Stevenson Sandra D Stephens Family Trust B FBO Scott R Jerry Blackburn Stephens John Ingram Sanjay Kumar Khurana John Powers Seth Bair Michael Kennealy Spectrum Equity Investors V, L.P. Robert Angart Spectrum V Investment Managers' Fund, L.P. Vikram Kashyap STG Partners LP The Moti and Suman Kashyap Family Trust Debtor’s Professionals u/d/d 01/23/01 Venture Lending & Leasing IV, LLC Alvarez & Marsal Venture Lending & Leasing V, LLC Paul Hastings Janofsky & Walker LLP Vibha Bhumitra Wilson Sonsini Goodrich & Rosati Optionholders Shareholders Amit Kale Andrew J. Hoag Living Trust Andras Andras Anthony Banas Angelique Johnson Bryce Steeg AnnMarie Scofield Caine Moss Anthony Banas Charles P. and Sandra D. Stephens TTEE FBO Ben Hoffman C. Austin Stephens U/A DTD 11/15/1965 Bhavesh Parikh Sandra D. Stephens Family Trust B Brandon Rozelle Daniel Green Brook Lewis David Evans Bruce Canny David Frankel Bruce Heyman David Paul McClure Bryce Steeg David Withers Caine Moss Douglas Matthew Ghertner Chad Hendry Financial Technology Partners LP Cheryl Kusper Foundation Capital VI Principals Fund, LLC Claire Chaplinski Foundation Capital VI, L.P. Damietta Jeffries GGV III Entrepreneurs Fund L.P. Dan Maschmeier Granite Global Ventures III, L.P. Daniel Green Jeffrey Thomas Daniel Stevenson Jeremy Blackburn Dave Majca John F. Powers David DeVito Jonathan Asher Lewin David Hawreluk JP Morgan Chase Bank, N.A. as trustee for First David Randall Plaza Group Trust for the sole benefit of Demetrius Maltsiniotis Pool PMI-127 (General Motors Hourly) Demmie Quinones JP Morgan Chase Bank, N.A. as trustee for First Drew Bradford Plaza Group Trust for the sole benefit of Eduard Gudava Pool PMI-129 (General Motors Salaried) Erin Slusser
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Financial Technology Partners LP Utilities Flora Fan Frank (Hongliang) Ding AT&T Jason Abrams Broadview Networks Jason Cook Cogent Communications Jay Geiger Comcast Jeff Aschenbach Commonwealth Edison Jeff Marsh Global Crossing Jennifer Nenadov Jeremy Blackburn Creditors and Other Parties in Interest John F. Powers John Geils 230 W Monroe PT LLC (affiliate of GEAM) John Ingram 3Core Software Corporation John Rownd 820 Media, Inc. John Sturgeon A-1 Technology Jonathan Doyle Accountemps (Chicago) Joseph Todd Rearden ADAM, Inc. Keith Bowen Advantage Health Solutions, Inc. Laura Larson (Podraza) Allied National, Inc. Lindsay Essi Alvarez & Marsal Lior Zorea Ariba Supplier Netwrok Luis Doffo Assurant Health Mark Hall AT&T - Business Services Mark Hassman AT&T - Virtual Telecomm Net Svc Mark Silvern Atlantic Information Services Mark Wallace Attune Solutions, Inc. Matthew Capell Bank of Indiana Meghan O'Shea Belongia Shapiro & Hines LLP Michael Hopkins Blue Cross Blue Shield Association Mohammed Yunus Blue Cross Blue Shield of Michigan Nitesh Phatnani Broadview Networks Paul Korenevsky CareGain, Inc. Ram Musunuri CDW Direct LLC Ray Kossman Cintas Rene Lacerte CMC Richard J Zalisk Coca Cola Roland Phillips IV Cogent Communications Ryselle Perlman Coloserv Scott Hazdra Commonwealth Edison Scott Rabin Comerica Bank Shanna Rodriguez Comerica Incorporated Susana Mesisenhelder Corner Bakery Cafe Teresa Rendina Coventry Mangement Services, Inc. Thomas Mucher David Frankel Traci Roberts David Withers Vikram A. Kashyap Dell Corporation Vlad Kuperman Dell Financial Services LLC William Moore Dell Marketing LP Zachary Beer Deluxe Dewitt Stern Group Series C and C-1 Warrant Holders Douglas Matthew Ghertner Dow Jones & Company Venture Lending & Leasing IV, LLC EGOEast Inc Venture Lending & Leasing V, LLC eHealthInsurance Services, Inc. Enterprise Wizard Equinix
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EscrowTech Plainsboro Township F5 Networks Proginet FedEx Qwest Communications Fifth Third Bank Red Ant Army First Data Resources (FDR) Rex Electric & Technologies, LLC FirstCarolinaCare Rice Mechanical FirstService Williams Ricoh Americas Corporation Fiserv Health, Inc. RSA Security Inc FTPS, LLP Shawnee Admin Servs., LLC FYI Systems SIGIS GE Capital Corporation Sovereign Bancorp Global Crossing Spectrum Equity Investors Harvard Pilgrim Healthcare Splice Communications HealthBenefit Bank (d/b/a Blue Healthcare SPR Companies Bank) Statim LLC Hipskind Technology Solutions Group Sungard Corbel Inc. HTI Symmetricom Human Capital Management Solutions The American Bankers’ Ass’n - HSA iEnergizer Thompson Publishing Group Impact Networking Thomson Reuters Impact Networking ThoughtWorks Integrated Data Storage Top Layer Security Intelius TRC Environmental Corporation Interactive Data Real-Time Services Trustwave Ipswitch, Inc. UMB Bank Iron Mountain Unicare Ironwood Capital Management UnitedHealthCare ISU Financial Services Venture Lending & Leasing IV Jeffrey Thomas Veritas Health Sys. Admin. and Ins. Servs. Jonathan Asher Lewin WebEx Just Great Tickets Wells Fargo & Co. f/k/a Wachovia Corp. KAP Graphics Western Technology Investment KPMG Wolters Kluwer Financial Servs. LEAF Workable Solutions, Inc. LexisNexis Zixcorp Lincoln Financial Peter Masucci Magenic Technologies Max Von Zuben Medco Merchant & Gould MMSI, Inc. Morningstar Inc NASDAQ National Account Servs. Co., LLC National City Newsura California Corp. Olenick & Associates, Inc. One the Side Investments, LLC Owen J. Leary Oxford Health Plan Paychex Personix (Fiserv) Phoenix Life Insurance Company Ping Identity Pitney Bowes Global Financial Services Pitney Bowes Purchase Power
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