FOX ROTHSCHILD LLP Yann Geron Daniel A.

Schnapp 100 Park Avenue, Suite 1500 New York, New York 10017 (212) 878-7900 Attorneys for Yann Geron, Chapter 7 Trustee

Hearing Date: December 14, 2011 Hearing Time: 10:00 a.m. Objection Deadline: December 7, 2011

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------x In re : : THELEN LLP, : : Debtor. : ------------------------------------------------------x

Chapter 7 Case No. 09-15631 (ALG)

TRUSTEES MOTION FOR AN ORDER, PURSUANT TO 11 U.S.C. 105 AND BANKRUPTCY RULES 7016, 7026 AND 9019(b), ESTABLISHING PROCEDURES IN CONNECTION WITH THE PARTNER ADVERSARY PROCEEDINGS AND THE PARTNER CLAIMS TO THE HONORABLE ALLAN L. GROPPER, UNITED STATES BANKRUPTCY JUDGE: Yann Geron (the Trustee), as chapter 7 trustee of the estate of Thelen LLP (the Debtor), the above-captioned debtor, by his counsel, Fox Rothschild LLP, as and for his application (the Application) for an order, pursuant to 11 U.S.C. 105 and Rules 7016, 7026 and 9019(b) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), establishing procedures in connection with the partner adversary proceedings commenced by the Trustee and the partners claims asserted in the instant bankruptcy proceeding, upon information and belief, respectfully sets forth and represents: Jurisdiction 1. This Court has jurisdiction over this case and Application pursuant to 28 U.S.C.

157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue is proper in

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this district and before this Court pursuant to 28 U.S.C. 1408 and 1409. The predicate for the relief sought herein is Section 105 of the Bankruptcy Code and Bankruptcy Rules 7016, 7026, and 9019(b). Background 2. On September 18, 2009 (the Petition Date), the Debtor filed a voluntary petition

for relief under chapter 7 of Title 11 of the United States Code (the Bankruptcy Code), in the United States Bankruptcy Court for the Southern District of New York. Yann Geron was appointed interim chapter 7 trustee of the Debtors estate. Mr. Geron has since qualified as permanent chapter 7 trustee and is currently serving in that capacity. 3. Prior to the Petition Date, Thelen LLP, formerly known as Thelen Reid Brown

Raysman & Steiner, operated largely as a bicoastal law firm with principal offices in New York and San Francisco, and other offices located in 8 U.S. cities, England and China. At its peak, Thelen employed roughly 600 attorneys. Thelen was founded in 1924 in San Francisco as Thelen, Marrin, Johnson & Bridges. In June 1998, Thelen Marrin merged with New York-based Reid & Priest, a firm with approximately 160 attorneys. On December 1, 2006, Thelen Reid & Priest merged with Brown Raysman Millstein Felder & Steiner, LLP, creating the bicoastal structure of the firm. Thelen was ranked 70th in the National Law Journals 2007 survey of the nations largest firms. Upon information and belief, a number of factors caused the firms demise, including difficulties following the Brown Raysman merger, significant partner departures, and failed merger discussions. 4. October 2008, the Debtor formally voted to dissolve the partnership. Thereafter,

the Debtor began its wind-down process under the guidance of a dissolution committee. Thelens dissolution committee appears to have focused its efforts on collection of Thelens

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accounts receivable, paying down its secured lines of credit with Citibank N.A., Thelens principal lender, and transitioning client files, using a skeleton staff in a small portion of Thelens San Francisco offices. After some months in dissolution, it appears that collections slowed and the Debtors pared-down operating costs became unsustainable under the Debtors arrangement with Citibank. As a result, the Debtor filed the instant bankruptcy proceeding. 5. The Trustees investigation into the Debtors pre-petition financial affairs

revealed that the estate possesses various theories of claims and causes of action against former equity partners of the firm, including certain contract claims against most or all of the Debtors former equity partners arising primarily from compensation they received in 2007 and 2008 as well as their failure to meet capital requirements (collectively, all potential claims and causes of action against former partners are referred to hereinafter as the Claims). 6. Specifically, the Trustee commenced 57 adversary proceedings for the purpose of

recovering on account of the Claims for the benefit of the creditors of the bankruptcy estate. The Adversary Proceedings 7. On or about September 16, 2011, the Trustee commenced a number of adversary

proceedings against certain of the Debtors former equity partners1 seeking to recover on account of the Claims (the Adversary Proceedings). A list of the Adversary Proceedings is annexed to the proposed Order (Exhibit A). 8. As detailed above, in September 2011, the Trustee filed adversary proceedings

against the Debtors former partners in which he asserted the following claims for relief: (i) breach of contract, (ii) turnover of estate property, (iii) unjust enrichment, and (iv) fraudulent conveyances asserted under the Bankruptcy Code and state law.

The Trustee sought tolling agreements from all partners. These adversary proceedings were brought against partners who did not timely return tolling agreements prior to the certain applicable statutes of limitations.

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Relief Requested 9. The Trustee respectfully requests that this Court enter an Order substantially in

the form of the proposed order: (a) limiting formal pretrial and discovery procedures, (b) limiting motion practice, and (c) limiting notice requirements for settlements depending upon the amount of the claim asserted by the Trustee. 10. Further, the Trustee requests that the procedures established by this motion be

made applicable in all future adversary proceedings the Trustee commences in this case against the Debtors former partners that are based on substantially similar facts and causes of action. a. Limitations on Discovery 11. The Trustee respectfully proposes that all formal discovery be stayed until after a

scheduling order is entered after a period of time within which the parties will attempt to consensually resolve the Adversary Proceedings. The temporary stay of formal discovery will facilitate the parties ability to resolve the Adversary Proceedings through the informal exchange of information and documents concerning the Trustees causes of action and the defendants alleged defenses before the parties are required to incur the substantial cost of formal discovery and litigation. 12. The Trustee requests that the Court waive the requirements of Bankruptcy Rule

7026(f), mandating that the parties attend a preliminary discovery conference in all Adversary Proceedings. The waiver of the mandatory conference to formulate a discovery plan at the outset of the Adversary Proceedings will allow the parties to focus on reaching a consensual resolution on the underlying claims before contemplating formal discovery and litigation. 13. The Trustee further requests that initial disclosures, pursuant to Bankruptcy Rule

7026, be made within 45 days from the filing of a defendants answer. Thereafter, all fact

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discovery should be completed within three months after the Bankruptcy Rule 7026 disclosures are made. After the initial period allowing an informal exchange of information and explanation of claims, the parties will have a clear understanding of the factual and legal issues in dispute, and will be able to narrowly tailor their discovery efforts. 14. As an additional measure to control cost and expense, the Trustee proposes that

no defendant be required to appear at the initial pretrial conference, which will be conducted pursuant to Bankruptcy Rule 7016, unless such defendant has filed a motion seeking a substantive determination by this Court in response to the complaint. The initial pretrial

conferences are currently scheduled for January 18, 2012, at 10:00 a.m. (Prevailing Eastern Time). b. Limitations on Motion Practice 15. In light of the large number of Adversary Proceedings filed by the Trustee, and

future adversary proceedings, there is a concern that unbridled motion practice may hinder the establishment of orderly and efficient litigation of the Trustees claims. Limiting motion practice will enable a cost-effective resolution of claims and discourage unnecessary motion practice defendants. 16. Accordingly, the Trustee respectfully requests that, with the exception of

Bankruptcy Rule 9019 motions and the defendants initial motions in response to the complaints, no motions be allowed in the Adversary Proceedings without the Courts prior approval, which may be sought on notice, via telephone conference with the Court and both the plaintiff and impacted defendant(s). c. Procedures for Approval of Settlements

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17.

It would be unduly burdensome and costly to the estate for the Trustee to provide

full notice of every settlement to all potential creditors and parties in interest, the parties having filed notices of appearance, and the defendants in the Adversary Proceedings2. Thus, the Trustee seeks an order limiting notice in connection with the settlement of the filed Adversary Proceedings and asserted Claims. 18. The Trustee is providing notice of this Motion to: (i) all parties that filed proofs of

claim, (ii) all parties that filed notices of appearance, (iii) all defendants in the Adversary Proceedings, (iv) all potential partner defendants who have currently tolled the Trustees time to commence actions on account of the Claims, and (v) the Office of the United States Trustee (collectively, the Full Service Parties). 19. For all future motions relating to the settlement of the Adversary Proceedings, the

Trustee proposes to implement the following streamlined procedures: (a) With respect to the settlement of an Adversary Proceeding or Claim asserted in which the total amount sought by the Trustee is less than $75,000, the Trustee proposes to serve notice of presentment of orders approving such settlements, pursuant to Local Bankruptcy Rule 9074-1. In the event no written objections are received to the proposed settlement, the Court may sign the order approving the settlement without conducting a formal hearing. With respect to the settlement of an Adversary Proceeding or Claim asserted in which the total amount sought by the Trustee is greater than $75,000, the Trustee proposes to serve notice of the motion of such settlement, pursuant to Bankruptcy Rule 9019. Regardless of whether written objections are received to the proposed settlement, a formal hearing will be conducted.

(b)

20.

Additionally, the Trustee proposes to limit service of the notices of motion

seeking approval of settlements of the Adversary Proceedings or Claims asserted solely to those parties who filed notices of appearance, the Office of the United States Trustee, and the settling
2

Currently, the service list for this estate is comprised of in excess of 685 parties.

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party or that partys counsel. Any party who wishes to receive future notice of these settlements will be required to file a notice of appearance pursuant to Bankruptcy Rule 2002 and the Trustee will provide notice to that party on a going forward basis. 21. The Trustee believes these proposed procedures provide for the most expeditious

and cost-effective mechanism to gain court approval of all settlements of the Adversary Proceedings and Claims. Without these procedures, the estate will incur sizable and unnecessary expenses on the approval process. Legal Authority a. Bankruptcy Rule 7016 22. Bankruptcy Rule 7016 incorporates Rule 16 of the Federal Rules of Civil

Procedure to govern pretrial conferences and scheduling in a matter. The Court has the authority to issue an Order concerning pretrial conferences for such purposes as (1) expediting disposition of the action; (2) establishing early and continuing control so that the case will not be protracted because of lack of management; (3) discouraging wasteful pretrial activities; (4) improving the quality of the trial through more thorough preparation; and (5) facilitating settlement. See Fed. R. Civ. P. 16(a). 23. In this matter, where a large number of similar Adversary Proceedings and Claims

are involved, utilization of the Courts equitable powers under 11 U.S.C. 105 to issue the requested order is necessary [and] appropriate to carry out the provisions of this title. Altering the Fed. R. Civ. P. 16(c)(1) requirement that all parties must attend the pretrial conference to require only attendance by defendants who have filed their own motions seeking substantive relief from the Court will not only ensure that the Court can make a prompt determination as to

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the pending motions, but will also allow defendants seeking settlement to focus primarily on that end while remaining apprised of the procedures sought by this Motion. 24. Further, the Trustee respectfully submits that, in lieu of numerous scheduling

orders governing formal discovery in those proceedings which proceed to litigation, the Court should establish of a uniform three-month period for formal discovery following a defendants 7026(a)(1)(C) initial disclosures. This will appropriately expedite the proceedings in view of the extended period of informal discovery while enhancing the potential for settlement. 25. Accordingly, the Trustee respectfully requests that, pursuant to Section 105 of the

Bankruptcy Code and Bankruptcy Rule 7016, no defendant be required to attend the pretrial conference unless the defendant has filed a motion for substantive relief in response to the complaint. Additionally, the Trustee requests that in advance of the scheduled pretrial

conference, that the court uniformly order that formal discovery in litigated proceedings shall extend no longer than three months from the defendants 7026(a)(1)(C) initial disclosures, absent further order of this Court. b. Bankruptcy Rule 7026(f) 26. Bankruptcy Rule 7026(f) provides that, [e]xcept in a proceeding otherwise

exempted from initial disclosure under Rule 26(a)(1)(B) or when the court orders otherwise, the parties must confer as soon as practicableand in any even at least 21 days before a scheduling conference is to be held or a scheduling order is due under Rule 16(b). 27. In this case, the Trustee has actively engaged with most or all of the defendants

and potential defendants on the nature of the Claims at issue. It is evident, therefore, that the parties in these proceedings are currently consider[ing] the nature and basis of their claims and

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defenses and the possibilities for promptly settling or resolving the case, as required in part by Rule 7026(f)(2) in the parties initial disclosures. 28. However, the concomitant requirement of the initial conference that all parties

must agree on [a] proposed discovery plan and submit[] to the court within 14 days after the conference a written report outlining the plan, will impede ongoing settlement discussions on both a group and an individual basis. 29. The Trustee respectfully submits that an order from the Court as provided for by

7026(f) to waive the requirement for an initial disclosure meeting will not impede the parties current exploration of settlement, and will in fact further that process. The deferral of the formal discovery aspect of the 7026(f) conference will allow the parties to focus on the merits and underlying issues in advance of costly and time-consuming discovery matters. 30. Accordingly, the Trustee requests that the Court enter the proposed order waiving

the initial disclosure conference referenced in Bankruptcy Rule 7026(f). c. Bankruptcy Rule 7026(a)(1)(C) 31. Bankruptcy Rule 7026(a)(1)(C) provides that [a] party must make the initial

disclosures at or within 14 days after the parties Rule 26(f) conference unless a different time is set by stipulation or court order . . . . 32. The Trustee respectfully submits that, in accordance with the requested waiver of

the parties Rule 26(f) conference, this Court issue an order under Rule 7026(a)(1)(C) requiring initial disclosures to be made within 45 days of the filing of the defendants answer. This will establish an appropriate timeline to make the required disclosures independent of any Rule 26(f) conference.

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d.

Bankruptcy Rule 9019 33. While Bankruptcy Rule 9019(a) generally requires approval of settlements upon a

motion on twenty-one days notice to, among others, all creditors, Bankruptcy Rule 9019(b) makes clear that those requirements are not always necessary: [a]fter a hearing on such notice as the court may direct, the court may fix a class or classes of controversies and authorize the trustee to compromise or settle controversies within such class or classes without further notice. Thus, Bankruptcy Rule 9019(b) provides a mechanism for streamlined settlement procedures where, as here, there is a large number of avoidance actions. As set forth in Collier on Bankruptcy: There are occasions in which a trustee will file a large number of complaints against many individual defendants. For example, actions to recover preferences may involve similar issues and seek recovery of relatively small amounts. In such situations, many settlements are often reached during the course of the litigation. Recognizing that forcing the trustee to file a new motion each time a settlement is reached would be onerous, expensive, and burdensome, Rule 9019(b) authorizes the court, after hearing on such notice as the court directs, to fix a class or classes of controversies and authorize the trustee to compromise or settle controversies within such class or classes without further hearing or notice. See 10 Lawrence P. King et al., Collier on Bankruptcy 9019.03 at 9019-5 to 9019-6 (15th ed. Rev. 2006). Accordingly, the Bankruptcy Rules permit the relief requested in this Motion to streamline the process of resolving the pending Adversary Proceedings and Claims. 34. The Trustee believes that the limited notice proposed herein will permit the

Trustee to utilize a cost-effective and efficient method for resolving the Adversary Proceedings and Claims in proper balance with the interests of due process and maximizing estate assets. 35. Accordingly, the Trustee requests that the Court enter the proposed order limiting

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the notice requirement contained in Bankruptcy Rule 2002(a)(3) and approving the settlement guidelines sought herein. Notice and Motion Practice 36. Notice of this Motion has been served upon all known creditors and

parties-in-interest, all parties requesting notice, all defendants in the Adversary Proceeding as well as all potential future defendants, and the Office of the United States Trustee. 37. This Application includes citations to the applicable rules and statutory authorities

upon which the relief requested is predicated. Accordingly, the Trustee respectfully submits that this Application satisfies the requirements of Local Bankruptcy Rule 9013-1(a). WHEREFORE, the Trustee respectfully requests that the Court enter an order, substantially in the form annexed as Exhibit A, approving the proposed procedures detailing herein and granting him such other and further relief as is just. Dated: New York, New York November 21, 2011 FOX ROTHSCHILD LLP Attorneys for Yann Geron, Chapter 7 Trustee By: /s/ Yann Geron Yann Geron Daniel A. Schnapp 100 Park Avenue, Suite 1500 New York, New York 10017 (212) 878-7900

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------x In re : : THELEN LLP, : : Debtor. : --------------------------------------------------------x

Chapter 7 Case No. 09-15631 (ALG)

ORDER, PURSUANT TO 11 U.S.C. 105 AND BANKRUPTCY RULES 7016, 7026 AND 9019(b), ESTABLISHING PROCEDURES IN CONNECTION WITH THE PARTNER ADVERSARY PROCEEDINGS AND THE PARTNER CLAIMS Upon the application, dated November 21, 2011 (the Application), of Yann Geron (the Trustee), as chapter 7 trustee of the estate of Thelen LLP (the Debtor), the abovecaptioned debtor, for an order, pursuant to 11 U.S.C. 105 and Bankruptcy Rules 7016, 7026 and 9019(b) (the Bankruptcy Rules), establishing procedures in connection with the partner adversary proceedings commenced by the Trustee and the partner claims asserted in the instant bankruptcy proceeding; and it appearing that good and sufficient notice of the Application has been given; and due consideration having been given to any responses thereto; and a hearing on the Application having been held before this Court on December 14, 2011 (the Hearing); and upon record of the Hearing, which is incorporated herein by reference; and for good and sufficient cause; it is hereby ORDERED, that the relief requested in the Application is granted to the extent provided herein, and it is further ORDERED, that, within three business days after its entry, the Trustee shall serve a copy of this Order upon each defendant in the adversary proceedings listed on annexed Exhibit A, as well as all potential partner defendants who have currently tolled the Trustees time to commence actions; and it is further

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ORDERED, that no defendant be required to appear at the initial pretrial conference, currently scheduled for January 18, 2012, at 10:00 a.m. (Prevailing Eastern Time), unless such defendant has filed a motion seeking a substantive determination by this Court in response to the complaint which is returnable on that date; and it is further ORDERED, that the requirement that the parties conduct a preliminary discovery conference, pursuant to Bankruptcy Rule 7026(f), is hereby waived; and it is further ORDERED, that the initial disclosures to be made by the parties pursuant to Bankruptcy Rule 7026(a), shall be made within 45 days of the filing of the defendants answer, and all fact discovery should be completed within three months of the initial disclosures; and it is further ORDERED, that, except for motions filed by the Trustee pursuant to Bankruptcy Rule 9019 or initial motions filed by defendants in response to the complaints, no motions may be made in partner adversary proceedings without the Courts prior approval, which may be sought, on notice, via telephone conference with the Court and both the plaintiff and impacted defendant(s); and it is further ORDERED, that the following streamlined procedures shall govern the settlement of the partner adversary proceedings and claims (whether or not asserted by complaint): (a) With respect to the settlement of a partner adversary proceeding or claim in which the total amount sought by the Trustee is less than $75,000, the Trustee is authorized to serve notice of presentment of orders approving such settlements, pursuant to Local Bankruptcy Rule 9074-1. In the event no written objections are received to the proposed settlement, the Court may sign the order approving the settlement without conducting a formal hearing; With respect to the settlement of a partner adversary proceeding or claim in which the total amount sought by the Trustee is greater than $75,000, the Trustee shall serve notice of the motion of such settlement pursuant to

(b)

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Bankruptcy Rule 9019. Regardless of whether written objections are received to the proposed settlement, a formal hearing shall be conducted; and it is further; ORDERED, that service of the proposed settlements of the partner adversary proceedings or claims is hereby limited to those parties who filed notices of appearance, the Office of the United States Trustee, and the settling party or that partys counsel; and it is further ORDERED, that the parties are authorized to execute such documents as may be necessary to effectuate the terms and conditions of this Order; and it is further ORDERED, that this court shall retain jurisdiction to hear and determine all matters arising from the implementation of this Order. Dated: New York, New York December ___, 2011 HONORABLE ALLAN L. GROPPER UNITED STATES BANKRUPTCY JUDGE

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Exhibit A to Order
Adversary Proceeding Number 11-02669 11-02715 11-02679 11-02714 11-02670 11-02671 11-02672 11-02674 11-02675 11-02676 11-02677 11-02713 11-02646 11-02712 11-02648 11-02650 11-02678 11-02652 11-02653 11-02655 11-02657 11-02706 11-02707 11-02659 11-02660 11-02711 11-02661 11-02663 11-02665 11-02667 11-02668 11-02680 11-02681 11-02710 11-02644 11-02683 11-02684 11-02685 11-02686 11-02687 11-02704 11-02688 11-02709 11-02689 11-02690 11-02691 4
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Amount Asserted $132,251 $138,014 $10,323 $122,927 $16,844 $43,286 $185,430 $101,442 $15,387 $71,345 $8,247 $146,972 $8,247 $15,524 $138,888 $20,755 $53,234 $37,167 $45,631 $93,911 $5,780 $7,554 $138,980 $74,076 $94,477 $141,169 $21,309 $32,078 $31,786 $22,786 $13,609 $113,270 $23,746 $158,915 $11,045 $26,483 $31,178 $20,733 $6,531 $53,038 $43,195 $15,463 $118,099 $29,140 $113,834 $14,752

11-02708 11-02692 11-02693 11-02695 11-02696 11-02697 11-02698 11-02699 11-02700 11-02701 11-02702

$143,427 $10,657 $16,526 $114,171 $6,555 $22,714 $61,365 $45,152 $107,963 $142,264 $10,878

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