1025-00007 · Quorum Insurance Holdings · SPV Formation & Corporate

non-consolidation-opinion-qrh-draft.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Attorneys at Law

601 Lexington Avenue New York, New York 10022

Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com

DRAFT — FOR DISCUSSION PURPOSES ONLY — NOT FOR RELIANCE

October 5, 2022

Quorum Receivables Funding 2022-1 LLC c/o Fortbridge Corporate Services LLC 1209 Orange Street Wilmington, Delaware 19801

Calvoneth Trust Company, National Association as Indenture Trustee 600 Travis Street, Suite 5800 Houston, Texas 77002

Ridgeline Capital Markets LLC as Initial Purchaser 383 Madison Avenue, 14th Floor New York, New York 10179

Re: Non-Consolidation Opinion — Quorum Receivables Holding LLC Matter No. 1025-00007

In connection with the issuance of $500,000,000 aggregate principal amount of asset-backed notes (the "Notes") by Quorum Receivables Funding 2022-1 LLC ("QRF 2022-1" or the "Issuer"), consisting of $375,000,000 Class A Notes, $75,000,000 Class B Notes, and $35,000,000 Class C Notes, and $15,000,000 Class R Residual Certificates

Ladies and Gentlemen:

I. Introduction and Purpose of Opinion

Calderwood & Harkness LLP ("we," "us," or "Calderwood & Harkness") has been engaged as issuer's counsel to Quorum Receivables Funding 2022-1 LLC, a Delaware limited liability company (the "Issuer" or "QRF 2022-1"), in connection with the above-referenced transaction (the "Transaction"). This opinion letter is being delivered in connection with the issuance by the Issuer of the Notes described above.

The purpose of this opinion is to opine that, in a hypothetical case under Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the "Bankruptcy Code"), in which Quorum Insurance Holdings Corp., a Delaware corporation ("QIH"), or Quorum Premium Finance LLC, a Delaware limited liability company ("QPF"), were to become a debtor, a bankruptcy court exercising proper jurisdiction would not order the substantive consolidation of Quorum Receivables Holding LLC, a Delaware limited liability company ("QRH"), with QIH or QPF, respectively or together.

QRH serves as the intermediate special purpose entity and depositor in the Transaction structure. In its capacity as depositor, QRH acquires insurance premium finance receivables (the "Receivables") from QPF under a Receivables Sale Agreement, dated as of October 12, 2022 (in execution draft form) (the "Receivables Sale Agreement"), and transfers such Receivables to QRF 2022-1 under a Receivables Transfer Agreement, dated as of October 12, 2022 (in execution draft form) (the "Receivables Transfer Agreement"). This two-step transfer structure is a fundamental feature of the Transaction and is designed to achieve true sale characterization and bankruptcy remoteness with respect to the Receivables transferred to the Issuer.

This opinion is being delivered in draft form, dated October 5, 2022, and has not been finalized. It is subject to further review and revision prior to any closing of the Transaction. This draft opinion is not intended for reliance in its current form and is circulated solely for discussion purposes among the addressees and their respective counsel. No party should take any action in reliance on this draft opinion.

II. Documents Reviewed

In rendering this opinion, we have reviewed originals or copies (certified or otherwise identified to our satisfaction) of the following documents (collectively, the "Reviewed Documents"):

1. Certificate of Formation of Quorum Receivables Holding LLC, filed with the Secretary of State of the State of Delaware on August 3, 2022 (Delaware Secretary of State File No. 7894228) (the "QRH Certificate of Formation").

2. Limited Liability Company Agreement of Quorum Receivables Holding LLC, dated as of August 3, 2022 (the "LLC Agreement"), by and between Quorum Premium Finance LLC, as sole member (the "Member"), and Eleanor M. Vasquez (designated by Fortbridge Corporate Services LLC), as independent manager (the "Independent Manager").

3. Independent Manager Agreement, dated as of August 3, 2022 (the "Independent Manager Agreement"), by and between QRH and Fortbridge Corporate Services LLC ("Fortbridge"), pursuant to which Fortbridge has agreed to provide Eleanor M. Vasquez as independent manager of QRH.

4. Receivables Sale Agreement (execution draft v3, dated October 12, 2022), by and between QPF, as seller, and QRH, as purchaser (the "Receivables Sale Agreement").

5. Receivables Transfer Agreement (execution draft v3, dated October 12, 2022), by and between QRH, as transferor, and QRF 2022-1, as transferee (the "Receivables Transfer Agreement").

6. Indenture (execution draft v4, dated October 12, 2022) (the "Indenture"), by and between QRF 2022-1, as issuer, and Calvoneth Trust Company, National Association ("Calvoneth Trust" or the "Indenture Trustee"), as trustee.

7. Draft UCC-1 Financing Statement naming QPF, as debtor, and QRH, as secured party, to be filed with the Secretary of State of the State of Delaware.

8. Draft UCC-1 Financing Statement naming QRH, as debtor, and QRF 2022-1, as secured party, to be filed with the Secretary of State of the State of Delaware.

9. Secretary's Certificate of Quorum Insurance Holdings Corp., dated July 27, 2022, certifying resolutions adopted by the Board of Directors of QIH authorizing the Transaction and the execution and delivery of the Transaction Documents to which QIH is a party.

10. Manager's Certificate of Quorum Premium Finance LLC, dated July 27, 2022, certifying resolutions adopted by the managers of QPF authorizing the Transaction and the execution and delivery of the Transaction Documents to which QPF is a party.

11. Certificate of Formation of Quorum Insurance Holdings Corp., as amended through the date hereof, the Amended and Restated Certificate of Incorporation of QIH, and the Bylaws of QIH, each as currently in effect; the Certificate of Formation of QPF, as filed with the Delaware Secretary of State, and the Limited Liability Company Agreement of QPF, each as currently in effect.

12. Preliminary Offering Memorandum (v3), dated October 12, 2022, prepared in connection with the offering and sale of the Notes (the "Offering Memorandum").

13. Such other documents, records, certificates, instruments, and matters of law as we have deemed necessary or appropriate for purposes of rendering this opinion, including the Account Control Agreement among QRF 2022-1, Calvoneth Trust, and Northvane Bank, N.A., the Administration Agreement between QRF 2022-1 and QIH, the Servicing Agreement among QRF 2022-1, QPF (as servicer), and Northvane Bank, N.A. (as back-up servicer), and the Performance Guaranty from QIH in favor of Calvoneth Trust.

The documents described in items (4) through (8) and (12) above, together with the Indenture, the Account Control Agreement, the Administration Agreement, the Servicing Agreement, and the Performance Guaranty, are collectively referred to herein as the "Transaction Documents."

We note that certain of the documents reviewed, including the Receivables Sale Agreement, the Receivables Transfer Agreement, the Indenture, and the Offering Memorandum, are in execution draft form and have not been finally executed and delivered. This opinion assumes that such documents will be executed and delivered in substantially the form reviewed by us, and that any changes to such documents between the date of this draft opinion and the date of execution will not be material to the analysis set forth herein. If any such documents are revised in a manner that is material to the matters addressed in this opinion, we reserve the right to modify, supplement, or withdraw this opinion.

III. Factual Background

A. QRH — Formation and Purpose

Quorum Receivables Holding LLC is a Delaware limited liability company formed on August 3, 2022, pursuant to the filing of its Certificate of Formation with the Secretary of State of the State of Delaware (Delaware Secretary of State File No. 7894228). QRH's registered agent in the State of Delaware is Ashgrove Services Inc., located at 28 Liberty Street, New York, New York 10005. QRH's federal employer identification number is 88-1247619.

The sole member of QRH is Quorum Premium Finance LLC, a Delaware limited liability company with a federal employer identification number of 84-2653198. QPF is, in turn, a wholly owned subsidiary of Quorum Insurance Holdings Corp., a Delaware corporation that is publicly traded on the New York Stock Exchange under the ticker symbol "QIHC" (federal employer identification number 82-4391067). QIH is headquartered at 400 Atlantic Street, Suite 2200, Stamford, Connecticut 06901.

QRH was formed for the limited purpose of acquiring insurance premium finance receivables from QPF and transferring such receivables to QRF 2022-1 in connection with the Transaction and similar securitization transactions. QRH's Certificate of Formation and LLC Agreement restrict QRH's activities to those related to its stated limited purpose. QRH does not, and is not permitted to, engage in any business other than the acquisition, holding, and transfer of Receivables and the execution, delivery, and performance of the Transaction Documents.

QRH serves as the intermediate special purpose entity and depositor in a two-step transfer structure. This structure is designed to achieve true sale characterization and bankruptcy remoteness for the benefit of the Noteholders and the other Transaction parties. In the first step, QPF sells the Receivables to QRH pursuant to the Receivables Sale Agreement. In the second step, QRH transfers the Receivables to QRF 2022-1 pursuant to the Receivables Transfer Agreement. The two-step structure interposes QRH between QPF (the originator) and QRF 2022-1 (the issuer), providing an additional layer of insulation against the risk that a bankruptcy filing by QPF or QIH could result in the Receivables being treated as property of the estate of QPF or QIH or in the substantive consolidation of QRF 2022-1 with QPF or QIH.

B. The Transaction Structure

QPF originates insurance premium finance loans to commercial policyholders across all fifty states and the District of Columbia. As of the date hereof, QPF's total outstanding portfolio of insurance premium finance receivables is approximately $2.1 billion. QPF is one of the largest independent insurance premium finance lenders in the United States and has been originating insurance premium finance loans since 2015.

Under the Receivables Sale Agreement, QPF sells, on a revolving basis, eligible Receivables to QRH. The purchase price for such Receivables consists of cash and a deferred purchase price component, structured to reflect fair value consideration for the Receivables sold. Under the Receivables Transfer Agreement, QRH transfers the Receivables so acquired to QRF 2022-1. QRF 2022-1, in turn, issues the Notes, which are backed by a revolving pool of Receivables. The initial pool balance, as of the cut-off date of June 30, 2022, is approximately $612,000,000.

The Notes consist of $375,000,000 aggregate principal amount of Class A Notes, $75,000,000 aggregate principal amount of Class B Notes, and $35,000,000 aggregate principal amount of Class C Notes. The Class A Notes are expected to receive preliminary ratings of "AAA" from Brindoval Ratings and "Aaa" from Pinnacle Rating Services. The Class B Notes are expected to receive preliminary ratings of "AA" and "Aa2," respectively, and the Class C Notes are expected to receive preliminary ratings of "A" and "A2," respectively. In addition, $15,000,000 of Class R Residual Certificates will be issued and retained by QRH or an affiliate thereof.

The two-step transfer structure (QPF → QRH → QRF 2022-1) is designed to insulate QRF 2022-1 from the consequences of a bankruptcy filing by QPF or QIH. By interposing QRH as an intermediate depositor — a separate, bankruptcy-remote special purpose entity — the Transaction structure provides an additional layer of protection for the Noteholders. Even if a bankruptcy court were to recharacterize the sale from QPF to QRH as a secured financing (a conclusion we do not reach and that is addressed in a separate true sale opinion), the existence of QRH as a separate, bankruptcy-remote entity would still provide protection against the substantive consolidation of QRF 2022-1 with QPF or QIH.

C. QIH and QPF — Relationship to QRH

Quorum Insurance Holdings Corp. is the ultimate parent entity in the corporate structure. QIH is a publicly traded Delaware corporation listed on the New York Stock Exchange under the ticker symbol "QIHC." QIH's principal executive officers include Marcus Devereaux (Chief Executive Officer), Priya Raghavan (Chief Financial Officer), Nolan Whitford (General Counsel and Secretary), and Sandra Ling-Hwang (Treasurer and Senior Vice President, Premium Finance).

For the fiscal year ended December 31, 2021, QIH reported consolidated revenue of approximately $3.8 billion. QIH's business operations encompass three principal segments: (i) property and casualty insurance distribution, (ii) premium finance lending (conducted through QPF and its subsidiaries), and (iii) insurtech software-as-a-service platforms. QIH is a well-capitalized, investment-grade rated enterprise with significant operations and assets independent of the Transaction.

QPF is the originator and servicer of the insurance premium finance receivables that form the collateral pool underlying the Notes. QPF is managed by Sandra Ling-Hwang, who serves as QPF's sole manager. QPF is a Delaware limited liability company and a wholly owned subsidiary of QIH. QPF serves as the initial servicer of the Receivables pursuant to the Servicing Agreement, with Northvane Bank, N.A. acting as back-up servicer.

QPF is the sole member of QRH but has limited governance rights with respect to QRH, subject to the provisions of the LLC Agreement and the independent manager protections described herein. In particular, QPF may not, without the affirmative vote of the Independent Manager, cause QRH to file a voluntary petition under the Bankruptcy Code, dissolve, merge or consolidate with any other entity, or amend the LLC Agreement in any manner that would adversely affect the separateness covenants or the independent manager requirements.

IV. Assumptions

In rendering this opinion, we have assumed the following (each, an "Assumption"), each of which we have not independently verified:

1. Execution and Delivery. All documents reviewed by us in connection with this opinion, including the Transaction Documents, will be duly executed and delivered by all parties thereto in substantially the form reviewed by us, and any changes to such documents between the date of this draft opinion and the date of execution will not be material to the analysis set forth herein.

2. Compliance with Separateness Covenants. The separateness covenants and operational requirements set forth in QRH's LLC Agreement (as described in Section V.B.3 below) will be observed and complied with by QRH, QPF, and their respective officers, managers, agents, and representatives at all times from and after the date of formation of QRH.

3. Independent Manager. QRH will at all times maintain an independent manager who satisfies the eligibility criteria set forth in the LLC Agreement and the Independent Manager Agreement. As of the date hereof, the independent manager is Eleanor M. Vasquez, designated by Fortbridge Corporate Services LLC (1209 Orange Street, Wilmington, Delaware 19801). QRH will not take any "Special Member Action" (as defined in the LLC Agreement), including the filing of a voluntary petition under the Bankruptcy Code, the dissolution, merger, or consolidation of QRH, or the amendment of the separateness covenants or independent manager provisions of the LLC Agreement, without the prior affirmative vote or written consent of the Independent Manager. In the event that Ms. Vasquez is unable or unwilling to serve, a qualified successor will be promptly appointed by Fortbridge in accordance with the terms of the Independent Manager Agreement.

4. Separate Books and Records. QRH will maintain its own books and records, separate and apart from the books and records of QIH, QPF, and any other affiliate. QRH's financial statements, to the extent prepared, will be prepared separately from those of QIH and QPF, although QRH's financial results may be included in QIH's consolidated financial statements in accordance with generally accepted accounting principles.

5. Separate Bank Accounts; No Commingling. QRH will maintain separate bank accounts and will not commingle its assets, funds, or accounts with those of QIH, QPF, or any other affiliate. All collections on the Receivables will be deposited into accounts maintained in the name of QRF 2022-1 or QRH, as applicable, and will be subject to the control of Calvoneth Trust as securities intermediary pursuant to the Account Control Agreement.

6. Separate Identity. QRH will hold itself out to third parties, including creditors, contract counterparties, governmental authorities, and the public, as a legal entity separate and apart from QIH, QPF, and their respective affiliates. QRH will use its own stationery, invoices, and other business documents, and will not represent itself as a division, department, or branch of QIH, QPF, or any affiliate.

7. Observance of Formalities. QRH will observe all limited liability company formalities required under the Delaware Limited Liability Company Act (6 Del. C. §§ 18-101 et seq.) and QRH's LLC Agreement, including the maintenance of minutes or records of actions taken by the member and the independent manager.

8. True Sale. The transfers of Receivables from QPF to QRH under the Receivables Sale Agreement will constitute "true sales" for purposes of federal bankruptcy law, such that the Receivables so transferred will not be property of the estate of QPF in a case under the Bankruptcy Code. We note that a separate true sale opinion addressing this characterization is being prepared by this firm and is expected to be dated on or about October 8, 2022. We express no opinion herein as to the true sale characterization of any transfer.

9. Adequate Capitalization. QRH will maintain adequate capitalization relative to its contemplated business activities, including its obligations under the Transaction Documents, and will not be rendered insolvent by the transactions contemplated hereby.

10. UCC Filings. All UCC-1 financing statements referenced herein, including the financing statement naming QPF as debtor and QRH as secured party and the financing statement naming QRH as debtor and QRF 2022-1 as secured party, will be properly filed with the Secretary of State of the State of Delaware and will be timely maintained through the filing of continuation statements as required under Article 9 of the Uniform Commercial Code.

11. Compliance with Transaction Documents. QRH, QPF, QIH, and each other party to the Transaction Documents will comply in all material respects with all representations, warranties, and covenants made by them in the Transaction Documents.

12. Accuracy of Factual Representations. The factual representations and certificates provided by officers and managers of QIH and QPF, including the Secretary's Certificate of QIH dated July 27, 2022, and the Manager's Certificate of QPF dated July 27, 2022, are true, correct, and complete in all material respects as of the dates thereof and will remain true, correct, and complete in all material respects as of the closing date of the Transaction.

If any of the foregoing Assumptions proves to be incorrect, incomplete, or otherwise not satisfied, this opinion may be materially affected, and we express no opinion with respect to the matters addressed herein to the extent any such Assumption is not satisfied.

V. Legal Analysis

A. Substantive Consolidation Doctrine — Overview

Substantive consolidation is an equitable remedy available in bankruptcy proceedings. Although not expressly authorized by any specific provision of the Bankruptcy Code, courts have recognized substantive consolidation as an exercise of the bankruptcy court's general equitable powers under Section 105(a) of the Bankruptcy Code, which provides that "[t]he court may 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). The doctrine has also been grounded, in some decisions, in Section 1123(a)(5)(C) of the Bankruptcy Code, which permits a plan of reorganization to provide for the "merger or consolidation of the debtor with one or more persons."

The effect of substantive consolidation is dramatic: the assets and liabilities of two or more entities are pooled and treated as though they constituted a single bankruptcy estate. Upon consolidation, intercompany claims are eliminated, and the creditors of each consolidated entity share pro rata in the combined pool of assets. Because substantive consolidation disregards the separate legal existence of distinct entities — entities that were formed and operated as separate legal persons — courts have consistently emphasized that it is an extraordinary remedy that should be applied sparingly and only in extreme circumstances. See, e.g., In re Owens Ashgrove Partners LLC, 419 F.3d 195, 211 (3d Cir. 2005) ("Substantive consolidation . . . is extreme and . . . its boundaries must be respected."); In re Augie/Restivo Baking Co., Ltd., 860 F.2d 515, 518 (2d Cir. 1988) ("The power to consolidate should be used sparingly.").

Two principal judicial frameworks have emerged for evaluating requests for substantive consolidation:

The *Augie/Restivo* Test (Second Circuit). In In re Augie/Restivo Baking Co., Ltd., 860 F.2d 515 (2d Cir. 1988), the United States Court of Appeals for the Second Circuit articulated a two-pronged test under which substantive consolidation is warranted only where:

(i) creditors dealt with the entities as a single economic unit and did not rely on the separate identity of any individual entity in extending credit (the "reliance" prong); or

(ii) the affairs of the debtors are so entangled that consolidation will benefit all creditors because separating the entities' assets and liabilities is impracticable or would result in undue expense and delay (the "entanglement" prong).

The Second Circuit emphasized that substantive consolidation is not a mere convenience but rather an equitable remedy of last resort, and that either prong must be established by clear and convincing evidence. The court further noted that the proponent of consolidation bears the burden of demonstrating that the standard is met, and that the remedy should be denied if there is a "reasonable possibility" that creditors relied on the separate existence of the entities. Augie/Restivo, 860 F.2d at 518-19.

The *Owens Ashgrove Partners LLC* Test (Third Circuit). In In re Owens Ashgrove Partners LLC, 419 F.3d 195 (3d Cir. 2005), the United States Court of Appeals for the Third Circuit adopted a more stringent standard. The Third Circuit held that substantive consolidation is warranted only where:

(i) the entities' assets and liabilities are so scrambled that separating them is "prohibitive and unavoidable," meaning that the costs of untangling the interrelationship exceed the benefits; or

(ii) creditors relied on the consolidated creditworthiness of the entities rather than on the separate existence and individual creditworthiness of any single entity in extending credit (the "reliance" prong).

The Third Circuit emphasized several key principles. First, substantive consolidation is a remedy in equity and "its application is necessarily driven by the equities of the specific case." Owens Ashgrove Partners LLC, 419 F.3d at 211. Second, the remedy should not be used to disadvantage creditors who extended credit in reliance on the separate existence and separate credit of a particular entity. Third, the mere existence of a parent-subsidiary relationship, common management, or intercompany transactions does not, standing alone, justify consolidation. Fourth, the proponent of consolidation bears a heavy burden, and any "credible objection" by a party that has relied on the separate existence of the entities weighs against consolidation.

Applicable Standard. Because QRH is a Delaware limited liability company, a bankruptcy case involving QRH would likely be commenced in the United States Bankruptcy Court for the District of Delaware, which sits within the Third Circuit. Accordingly, the Owens Ashgrove Partners LLC standard would likely be the applicable framework for evaluating any substantive consolidation motion. However, we analyze QRH's separateness under both the Third Circuit (Owens Ashgrove Partners LLC) and Second Circuit (Augie/Restivo) standards below.

Under either test, the party seeking substantive consolidation bears a heavy burden, and courts have consistently declined to order consolidation where, as here, the entities in question maintain separate legal existence, separate books and records, separate assets, and arm's-length relationships, and where creditors have extended credit in reliance on the separate identity and creditworthiness of the entity in question.

B. Analysis of Separateness Factors — QRH vis-à-vis QIH and QPF

We have analyzed the following factors, which courts have identified as relevant to the substantive consolidation inquiry, in assessing whether a court would order the substantive consolidation of QRH with QIH or QPF.

1. Separate Legal Existence and Formation

QRH is a separate legal entity, duly formed as a Delaware limited liability company on August 3, 2022, by the filing of its Certificate of Formation with the Secretary of State of the State of Delaware (Delaware Secretary of State File No. 7894228). QRH has its own federal employer identification number (88-1247619), its own Certificate of Formation, and its own LLC Agreement. QRH has its own registered agent (Ashgrove Services Inc., 28 Liberty Street, New York, New York 10005), which is distinct from the registered agents of QIH and QPF.

QRH was formed for a specific, limited purpose: the acquisition of insurance premium finance receivables from QPF and the transfer of such receivables to QRF 2022-1 or similar issuance vehicles. QRH's Certificate of Formation and LLC Agreement expressly restrict QRH's activities to those related to this limited purpose. The formation of QRH as a separate legal entity with a distinct Certificate of Formation, distinct organizational documents, and a distinct EIN weighs strongly against any finding that QRH is a mere alter ego or instrumentality of QIH or QPF.

2. Independent Manager / Governance

A critical element of QRH's bankruptcy-remote structure is the requirement that QRH maintain, at all times, an independent manager. Pursuant to the LLC Agreement and the Independent Manager Agreement, Fortbridge Corporate Services LLC (1209 Orange Street, Wilmington, Delaware 19801) has designated Eleanor M. Vasquez as the Independent Manager of QRH. Ms. Vasquez is not, and has never been, an employee, officer, director, member, partner, manager, or affiliate of QIH, QPF, or any of their respective subsidiaries or affiliates (other than QRH, in her capacity as Independent Manager). Ms. Vasquez has no financial interest in, or economic dependence upon, QIH, QPF, or any of their affiliates (other than the fees payable to Fortbridge under the Independent Manager Agreement).

Under the LLC Agreement, certain enumerated "Special Member Actions" require the prior affirmative vote or written consent of the Independent Manager. These Special Member Actions include, without limitation:

(a) the filing of a voluntary petition by QRH under the Bankruptcy Code or any analogous state insolvency proceeding;

(b) the dissolution, liquidation, or winding up of QRH;

(d) the sale of all or substantially all of QRH's assets, other than as contemplated by the Transaction Documents;

(e) the amendment, modification, or waiver of any provision of the LLC Agreement relating to the separateness covenants, the independent manager requirement, or the Special Member Actions;

(f) the incurrence by QRH of any indebtedness, other than as expressly contemplated by the Transaction Documents; and

(g) the taking of any action that would cause QRH to be treated other than as an entity separate from QIH, QPF, and their respective affiliates.

This governance mechanism ensures that QPF, as the sole member of QRH, cannot unilaterally cause QRH to file a voluntary bankruptcy petition or take any other action that would undermine QRH's separate existence or bankruptcy remoteness. The independent manager requirement is a well-established feature of bankruptcy-remote special purpose entity structures and has been recognized by courts and rating agencies as a significant factor supporting the separateness and bankruptcy remoteness of such entities.

3. Separateness Covenants in the LLC Agreement

The LLC Agreement contains comprehensive separateness covenants that QRH is required to observe at all times. These covenants are designed to ensure that QRH maintains its status as a separate legal entity and are a central feature of the bankruptcy-remote structure. The separateness covenants include the following:

(a) Separate Books and Records. QRH shall maintain its own books and records, separate and distinct from the books and records of QIH, QPF, and each of their respective affiliates. To the extent that QRH's financial results are included in the consolidated financial statements of QIH in accordance with generally accepted accounting principles, such consolidated financial statements shall contain a footnote or other disclosure indicating that QRH is a separate legal entity whose assets are not available to satisfy the obligations of QIH, QPF, or any other affiliate.

(b) Separate Bank Accounts; No Commingling. QRH shall maintain its own bank accounts, separate and distinct from the bank accounts of QIH, QPF, and each of their respective affiliates. QRH shall not commingle its funds, assets, or accounts with those of QIH, QPF, or any other person or entity. All collections and proceeds relating to the Receivables shall be deposited into segregated accounts in the name of QRH or QRF 2022-1, as applicable.

(c) No Cross-Guarantees. QRH shall not guarantee, assume, or become obligated on the debts, liabilities, or obligations of QIH, QPF, or any other affiliate, and neither QIH, QPF, nor any other affiliate shall guarantee, assume, or become obligated on the debts, liabilities, or obligations of QRH, except as expressly provided in the Transaction Documents.

(d) Separate Identity. QRH shall hold itself out to third parties, including creditors, contract counterparties, governmental authorities, and the public, as a legal entity separate and apart from QIH, QPF, and their respective affiliates. QRH shall use its own stationery, invoices, checks, and other business documents, and shall not hold itself out as a division, department, or branch of QIH, QPF, or any other person or entity.

(e) Own Expenses. QRH shall pay its own liabilities, costs, and expenses from its own funds, and shall not pay or satisfy the liabilities, costs, or expenses of QIH, QPF, or any other affiliate from QRH's funds (except for reasonable allocations of shared overhead costs, to the extent documented and conducted on arm's-length terms).

(f) Own Name. QRH shall conduct its business in its own name, and shall not transact business or enter into contracts in the name of QIH, QPF, or any other affiliate.

(g) No Credit Support. QRH shall not hold out its credit or assets as being available to satisfy the obligations of QIH, QPF, or any other person or entity. QRH shall not pledge its assets to secure the obligations of any other person or entity.

(h) Arm's-Length Relationships. QRH shall maintain arm's-length relationships with QIH, QPF, and their respective affiliates. All transactions between QRH and any affiliate shall be on terms and conditions that are no less favorable to QRH than those that would be obtained in a comparable arm's-length transaction with an unrelated third party.

(i) Tax Treatment. QRH shall file its own tax returns to the extent required by applicable law, or, if QRH is properly treated as a disregarded entity of QPF for federal and state income tax purposes, such treatment shall be maintained in a manner consistent with QRH's separateness for bankruptcy and other non-tax purposes. QRH's tax characterization as a disregarded entity does not affect its status as a separate legal entity under state organizational law or for bankruptcy purposes. See 6 Del. C. § 18-201(b) (a Delaware LLC has a legal existence separate from its members).

(j) Adequate Capital. QRH shall maintain adequate capital in light of its contemplated business activities and obligations under the Transaction Documents, and shall not make any distribution to its member that would render QRH unable to pay its debts as they come due.

(k) No Affiliate Obligations. QRH shall not acquire any obligations or securities of its member, QIH, or any other affiliate, except as expressly contemplated by the Transaction Documents.

(l) Correction of Misunderstandings. QRH shall take all reasonable steps to correct any known misunderstanding regarding its separate identity, including any misunderstanding by creditors, counterparties, or governmental authorities.

The foregoing separateness covenants, taken together, are comprehensive and consistent with market practice for bankruptcy-remote special purpose entities used in securitization transactions. Compliance with these covenants is essential to maintaining QRH's separate legal identity and to supporting the conclusion that a court would not order substantive consolidation of QRH with QIH or QPF.

4. Non-Petition Covenant

The LLC Agreement contains a covenant by QPF, as the sole member of QRH, not to file or join in the filing of any involuntary petition under the Bankruptcy Code (or any analogous state insolvency proceeding) against QRH. The LLC Agreement also contains a covenant by QRH not to file a voluntary petition under the Bankruptcy Code (or any analogous state insolvency proceeding) without the prior affirmative vote or written consent of the Independent Manager (currently, Eleanor M. Vasquez).

These non-petition covenants are a standard and well-established feature of bankruptcy-remote special purpose entity structures. Under Delaware law, provisions in an LLC agreement restricting the authority of members or managers to take specified actions, including the filing of a bankruptcy petition, are generally enforceable. See 6 Del. C. § 18-1101(b) ("It is the policy of [the Delaware LLC Act] to give the maximum effect to the principle of freedom of contract and to the enforceability of limited liability company agreements."). While there is limited case law addressing the enforceability of non-petition covenants in the specific context of Delaware LLCs, the weight of authority supports the enforceability of such provisions, particularly where the covenant is accompanied by the independent manager requirement and is a condition on which third-party creditors (such as the Noteholders) have relied in extending credit. See also In re Kingston Square Associates, 214 B.R. 713, 725 (Bankr. S.D.N.Y. 1997) (discussing enforceability of blocking provisions in SPV structures).

5. Limited Purpose and Activities

As described above, QRH's LLC Agreement restricts QRH's activities to those related to the acquisition, holding, and transfer of Receivables and the execution, delivery, and performance of the Transaction Documents. QRH may not engage in any business or activity other than its stated limited purpose. This restriction ensures that QRH does not accumulate extraneous assets, liabilities, or business relationships that could create the appearance of entanglement with QIH or QPF.

QRH has no employees. All administrative functions necessary for QRH's operations are performed by QIH, acting as administrator under the Administration Agreement, for which QIH receives a market-rate administration fee. QRH does not maintain its own office space; its business address is the office of its registered agent or, as applicable, the office of QIH as administrator. These arrangements are consistent with market practice for depositor entities in securitization transactions and do not undermine QRH's separate legal existence.

QRH does not incur indebtedness except as expressly contemplated by the Transaction Documents. QRH's only significant liabilities are its obligations under the Receivables Transfer Agreement, the Administration Agreement, and incidental operating expenses. QRH's limited purpose and restricted activities ensure that the entity remains a "clean" vehicle with readily identifiable assets and liabilities, which is a critical factor in the substantive consolidation analysis.

6. Asset Segregation / True Sale

A central feature of the Transaction structure is the treatment of the transfer of Receivables from QPF to QRH as a "true sale" — i.e., as a sale or absolute transfer of the Receivables, rather than a secured loan or other financing. If the true sale characterization is respected, the Receivables transferred to QRH would not constitute property of QPF's bankruptcy estate under Section 541 of the Bankruptcy Code, and QPF's creditors would not be able to reach those Receivables.

The characterization of the QPF-to-QRH transfer as a true sale is supported by a separate true sale opinion being prepared by this firm, expected to be dated on or about October 8, 2022. We express no opinion herein as to the true sale characterization of any transfer; however, we have assumed, for purposes of this non-consolidation opinion, that the transfers will constitute true sales.

As a precautionary measure, a UCC-1 financing statement will be filed with the Secretary of State of the State of Delaware naming QPF as debtor and QRH as secured party, covering the Receivables transferred under the Receivables Sale Agreement. This precautionary filing is designed to protect QRH's interest in the Receivables in the event that a court were to recharacterize the transfer as a secured financing rather than a true sale. In addition, the Receivables Sale Agreement contains a back-up security interest grant by QPF in favor of QRH, which would grant QRH a perfected security interest in the Receivables in the event of recharacterization.

The economic terms of the sale are structured to provide reasonably equivalent value for the Receivables sold. The purchase price consists of a cash component (funded from the proceeds of QRH's transfer of the Receivables to QRF 2022-1) and a deferred purchase price component. The provision of reasonably equivalent value reduces the risk that the transfer could be challenged as a fraudulent conveyance under Sections 548 or 544(b) of the Bankruptcy Code.

7. No Commingling of Assets

QRH's assets — consisting principally of the Receivables and the proceeds thereof — are at all times segregated from the assets of QIH and QPF. QRH maintains separate bank accounts, and funds belonging to QRH are not deposited into or held in accounts belonging to QIH, QPF, or any other affiliate.

Collections on the Receivables flow through designated collection accounts and are ultimately deposited into accounts maintained in the name of QRF 2022-1 or QRH, as applicable. These accounts are subject to the control of Calvoneth Trust Company, N.A., acting as securities intermediary under the Account Control Agreement. The Account Control Agreement establishes Calvoneth Trust's exclusive control over the relevant accounts, ensuring that neither QPF nor QIH can access or divert the collections without the consent of Calvoneth Trust.

The segregation of QRH's assets from those of QIH and QPF, and the establishment of independent control over the collection accounts, are critical features of the bankruptcy-remote structure. These features ensure that QRH's assets and liabilities are readily identifiable and separable from those of QIH and QPF, which is directly relevant to the "scrambling" prong of the Owens Ashgrove Partners LLC test and the "entanglement" prong of the Augie/Restivo test.

8. Third-Party Reliance on Separate Identity

A key factor in the substantive consolidation analysis is whether creditors and other transaction counterparties have relied on the separate identity and creditworthiness of the entity in question, as opposed to the consolidated creditworthiness of the entity and its affiliates.

In this case, the evidence of separate-entity reliance is compelling. Each of the principal transaction counterparties — including the Noteholders, Calvoneth Trust Company, N.A. (as Indenture Trustee), Northvane Bank, N.A. (as back-up servicer and liquidity provider), and Ridgeline Capital Markets LLC (as initial purchaser) — deals with QRH and QRF 2022-1 as legal entities separate and distinct from QIH and QPF. The Transaction Documents are structured to emphasize the separateness of these entities, and each counterparty's decision to participate in the Transaction is predicated, in significant part, on the bankruptcy remoteness and separateness of the SPV structure.

The preliminary ratings assigned by Brindoval Ratings and Pinnacle Rating Services are expressly predicated on the bankruptcy remoteness and separateness of the SPV structure. The rating agencies' analyses assume that QRH and QRF 2022-1 are separate legal entities whose assets would not be subject to the claims of QIH's or QPF's creditors in the event of a bankruptcy filing by either of those entities. Any failure to maintain QRH's separateness could result in a downgrade or withdrawal of the ratings assigned to the Notes.

The Offering Memorandum will disclose the separate existence of QRH and its bankruptcy-remote features, including the separateness covenants, the independent manager requirement, and the non-petition covenants. Prospective purchasers of the Notes will be informed that the Transaction structure is designed to ensure that the Receivables are insulated from the bankruptcy risk of QIH and QPF, and that QRH is a separate legal entity that is not expected to be substantively consolidated with QIH or QPF.

Accordingly, creditors of QRH and QRF 2022-1 are expected to rely — and, based on the structure of the Transaction, will have every reason to rely — on the separate identity, separate assets, and separate creditworthiness of QRH and QRF 2022-1, rather than on the consolidated credit of QIH or QPF. This separate-entity reliance is directly relevant to the "reliance" prong of both the Owens Ashgrove Partners LLC and Augie/Restivo tests and weighs strongly against any finding that substantive consolidation is warranted.

C. Entanglement Analysis

In evaluating whether substantive consolidation is appropriate, courts examine whether the affairs of the entities in question are so entangled that consolidation would benefit all creditors by avoiding the prohibitive cost and difficulty of separating the entities' assets and liabilities. Under the Third Circuit's Owens Ashgrove Partners LLC test, the relevant inquiry is whether the entities' assets and liabilities are so "scrambled" that separating them is "prohibitive and unavoidable." Under the Second Circuit's Augie/Restivo test, the relevant inquiry is whether the entities' affairs are so "entangled" that consolidation will benefit all creditors.

Based on our review of the Reviewed Documents and the Assumptions set forth herein, we conclude that the affairs of QRH are not so entangled with those of QIH or QPF as to warrant substantive consolidation under either framework. The following factors support this conclusion:

• QRH's books and records are maintained separately from those of QIH and QPF, and QRH's assets and liabilities are readily identifiable and separable from those of QIH and QPF.

• QRH maintains separate bank accounts, and its funds are not commingled with those of QIH, QPF, or any other affiliate.

• QRH does not guarantee, assume, or become obligated on the debts or liabilities of QIH or QPF, and neither QIH nor QPF guarantees, assumes, or becomes obligated on the debts or liabilities of QRH (except as expressly provided in the Transaction Documents).

• QRH's assets consist solely of the Receivables acquired from QPF and the proceeds thereof. These assets are clearly identifiable and are not commingled with the assets of QIH or QPF.

• QRH's liabilities consist solely of its obligations under the Transaction Documents and incidental operating expenses. These liabilities are clearly identifiable and do not overlap with the liabilities of QIH or QPF.

• The only intercompany transactions involving QRH are those contemplated by the Transaction Documents (i.e., the purchase of Receivables from QPF and the transfer of Receivables to QRF 2022-1). These transactions are conducted on arm's-length terms and are fully documented in the Transaction Documents.

• There are no cross-guarantees or cross-collateralization arrangements between QRH and QIH or QPF (except as expressly provided in the Transaction Documents). We note that QIH has executed a Performance Guaranty in favor of Calvoneth Trust, pursuant to which QIH guarantees certain performance obligations of QPF as servicer. This guaranty runs from QIH to Calvoneth Trust and does not create any obligation of QRH to QIH or any basis for the consolidation of QRH's assets and liabilities with those of QIH. The Performance Guaranty is a credit enhancement for the benefit of the Noteholders and does not blur the separateness of QRH.

• There is no evidence, nor is there any expectation, of intercompany transfers between QRH and QIH or QPF outside the scope of the Transaction Documents.

Accordingly, the affairs of QRH are not so entangled with those of QIH or QPF that separation would be prohibitively difficult or would fail to benefit creditors. To the contrary, QRH's assets and liabilities are readily identifiable and separable, and the costs of maintaining the entities' separate existence are minimal.

D. Third Circuit / Delaware Analysis (*Owens Ashgrove Partners LLC* Framework)

Because QRH is a Delaware limited liability company, a bankruptcy case involving QRH, QIH, or QPF (to the extent filed in Delaware) would likely be subject to the precedent of the Third Circuit, including the Owens Ashgrove Partners LLC decision. Accordingly, we analyze the propriety of substantive consolidation under the Owens Ashgrove Partners LLC framework.

Prong 1: Scrambling of Assets. The first prong of the Owens Ashgrove Partners LLC test requires a showing that the entities' assets and liabilities are so scrambled that separating them is "prohibitive and unavoidable." Owens Ashgrove Partners LLC, 419 F.3d at 211. As discussed in detail above, QRH's assets (the Receivables and the proceeds thereof) are clearly identifiable and are at all times segregated from the assets of QIH and QPF. QRH maintains separate bank accounts, does not commingle funds with QIH or QPF, and does not have any assets that are intermingled with, or inseparable from, the assets of QIH or QPF. QRH's liabilities are similarly discrete and limited to its obligations under the Transaction Documents and incidental operating expenses. There is no scrambling of assets or liabilities that would make separation prohibitive or unavoidable.

Prong 2: Creditor Reliance. The second prong of the Owens Ashgrove Partners LLC test requires a showing that creditors relied on the consolidated creditworthiness of the entities rather than on the separate existence and individual creditworthiness of any single entity. As discussed above, the Noteholders, Calvoneth Trust, Northvane Bank, Ridgeline Capital Markets, and the rating agencies each deal with QRH as a separate legal entity and rely on the bankruptcy remoteness and separateness of the SPV structure. The Transaction is expressly designed to ensure that creditors extend credit in reliance on the separate assets of QRF 2022-1 and the bankruptcy-remote features of the structure, not on the consolidated creditworthiness of QIH or QPF. There is no basis for a finding that creditors relied on the consolidated credit of QIH, QPF, and QRH.

Conclusion. Based on our analysis, we believe that a court applying the Third Circuit's Owens Ashgrove Partners LLC standard would not order the substantive consolidation of QRH with QIH or QPF. Neither prong of the Owens Ashgrove Partners LLC test is satisfied, and the equities strongly favor respecting the separate legal existence of QRH.

E. Second Circuit Analysis (*Augie/Restivo* Framework)

Although we believe that the Third Circuit's Owens Ashgrove Partners LLC standard is the more likely applicable framework, we also analyze the propriety of substantive consolidation under the Second Circuit's Augie/Restivo standard.

Prong 1: Single Economic Unit / No Separate Reliance. The first prong of the Augie/Restivo test asks whether, prepetition, creditors dealt with the entities as a single economic unit and did not rely on the separate identity of any individual entity in extending credit. As discussed above, the Transaction is structured to ensure that creditors of QRH and QRF 2022-1 deal with those entities as separate legal persons, distinct from QIH and QPF. The Transaction Documents, the Offering Memorandum, and the rating agency analyses all emphasize the separateness of QRH and QRF 2022-1. There is no basis for a finding that creditors treated QRH, QIH, and QPF as a single economic unit or failed to rely on QRH's separate identity.

Prong 2: Entanglement Benefiting All Creditors. The second prong of the Augie/Restivo test asks whether the affairs of the entities are so entangled that consolidation will benefit all creditors. As discussed in Section V.C above, QRH's affairs are not entangled with those of QIH or QPF. QRH's assets and liabilities are readily identifiable and separable, and consolidation would not benefit all creditors. To the contrary, substantive consolidation of QRH with QIH or QPF would harm the Noteholders by subjecting the Receivables (which are held by QRF 2022-1, having been transferred from QRH) to the claims of QIH's or QPF's general unsecured creditors, thereby diluting the Noteholders' recovery and undermining the very structure on which the Noteholders relied in purchasing the Notes.

Conclusion. Based on our analysis, we believe that a court applying the Second Circuit's Augie/Restivo standard would likewise not order the substantive consolidation of QRH with QIH or QPF. Neither prong of the Augie/Restivo test is satisfied, and the equities weigh decisively against consolidation.

VI. Qualifications and Limitations

This opinion is subject to the following qualifications and limitations:

1. Governing Law. This opinion is limited to the laws of the State of New York, the federal laws of the United States (including the Bankruptcy Code), and the Delaware Limited Liability Company Act (6 Del. C. §§ 18-101 et seq.). We express no opinion as to the laws of any other jurisdiction, including the laws of any state other than New York and Delaware, or the laws of any foreign country.

2. Date of Opinion. This opinion is based on the facts existing, and the law in effect, as of the date hereof. We have no obligation to update or supplement this opinion to reflect any changes in facts or law occurring after the date hereof, whether or not such changes would affect the conclusions expressed herein.

3. Assumptions. This opinion is based on the Assumptions set forth in Section IV above. If any Assumption proves to be incorrect, incomplete, or otherwise not satisfied, this opinion may be materially affected, and we express no opinion with respect to the matters addressed herein to the extent any such Assumption is not satisfied.

4. Equitable Discretion. The question of whether a bankruptcy court would order the substantive consolidation of QRH with QIH or QPF is, by its nature, a fact-intensive inquiry within the equitable discretion of the bankruptcy court. No opinion, however carefully rendered, can guarantee the outcome of such a proceeding. Our opinion reflects our professional judgment as to the most likely outcome based on the facts and law as we understand them, but we acknowledge that a court could reach a different conclusion, particularly if the facts or circumstances differ from those assumed herein.

5. True Sale. This opinion does not address, and we express no opinion on, whether the transfers of Receivables from QPF to QRH constitute "true sales" for purposes of federal bankruptcy law or any other law. The true sale characterization is addressed in a separate true sale opinion being prepared by this firm, expected to be dated on or about October 8, 2022.

6. Tax Characterization. This opinion does not address, and we express no opinion on, the tax characterization or treatment of QRH, QRF 2022-1, or any transaction contemplated by the Transaction Documents. The tax characterization of the entities and transactions is addressed in a separate tax opinion prepared by Sylvia Hartwell, Esq.

7. Ongoing Compliance. This opinion assumes ongoing compliance by QRH, QPF, QIH, and their respective officers, managers, agents, and representatives with the separateness covenants and operational requirements set forth in the LLC Agreement and the Transaction Documents. Any failure to observe such covenants — including any commingling of assets, failure to maintain separate books and records, failure to maintain the independent manager, or failure to hold QRH out as a separate entity — could materially alter the analysis set forth herein and could increase the risk that a court would order substantive consolidation.

8. Delaware Counsel. Calderwood & Harkness LLP is a New York law firm and does not hold itself out as experts on matters of Delaware law. We opine on matters of Delaware law only to the extent of the Delaware Limited Liability Company Act as applied to the formation, governance, and operation of QRH. The addressees may wish to obtain a separate opinion from Delaware counsel as to matters of Delaware law, including the enforceability of the separateness covenants, the non-petition covenants, and the independent manager provisions under Delaware law.

9. Reliance. This opinion is rendered solely for the benefit of the addressees named herein and their successors and assigns as holders of the Notes or as Indenture Trustee, and may not be relied upon by any other person or entity without our prior written consent.

10. Bankruptcy Limitations. This opinion is subject to the effect of (a) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent transfer, fraudulent conveyance, preference, and similar laws affecting creditors' rights generally, (b) general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), including concepts of materiality, reasonableness, good faith, and fair dealing, and (c) the exercise by any court of its equitable powers, including the power to deny specific performance or other equitable remedies.

11. No Other Matters. Except as expressly set forth herein, we express no opinion on any other matter, including, without limitation, the validity, enforceability, or binding effect of any Transaction Document, the perfection or priority of any security interest, or the compliance of any party with any applicable law, rule, or regulation.

VII. Draft Status Notice

IMPORTANT NOTICE REGARDING DRAFT STATUS

This opinion is in DRAFT form only, dated October 5, 2022. It has not been finalized and is not intended for reliance in its current form. This draft opinion is circulated solely for discussion purposes among the addressees and their respective counsel and advisors, and no party should take any action in reliance on this draft opinion.

Finalization of this opinion was to occur at or prior to the closing of the offering of the Notes. We anticipated that the finalized opinion would reflect, among other things, (a) the execution and delivery of all Transaction Documents in final form, (b) confirmation of the filing of all UCC-1 financing statements, (c) receipt of all officer's certificates and other closing deliverables, and (d) any updates to the factual background or legal analysis necessitated by changes occurring between the date of this draft and the closing date.

We note for the record that the Transaction was shelved as of November 14, 2022, and this opinion was never finalized, executed, or delivered. The Transaction Documents reviewed by us were never executed in final form, and the Notes were never issued. Accordingly, this draft opinion has no legal force or effect and may not be relied upon by any person for any purpose.

This draft remains subject to further review, revision, and updating, and any final opinion, if issued, may differ in material respects from this draft.

VIII. Opinion

Subject to the foregoing Assumptions, qualifications, and limitations, and based on our review of the Reviewed Documents and the applicable law, it is our opinion that:

If Quorum Insurance Holdings Corp. or Quorum Premium Finance LLC were to become a debtor in a case under Title 11 of the United States Code (the "Bankruptcy Code"), a court exercising proper jurisdiction and applying the applicable legal standards — whether under the framework articulated by the United States Court of Appeals for the Third Circuit in In re Owens Ashgrove Partners LLC, 419 F.3d 195 (3d Cir. 2005), or the framework articulated by the United States Court of Appeals for the Second Circuit in In re Augie/Restivo Baking Co., Ltd., 860 F.2d 515 (2d Cir. 1988) — would not order the substantive consolidation of Quorum Receivables Holding LLC with Quorum Insurance Holdings Corp. or Quorum Premium Finance LLC, provided that Quorum Receivables Holding LLC has at all times observed and continues to observe the separateness covenants and operational requirements set forth in its Limited Liability Company Agreement and the Transaction Documents, including, without limitation, the requirements relating to the maintenance of separate books and records, separate bank accounts, an independent manager, adequate capitalization, and arm's-length relationships with affiliates.

This opinion is limited to the matters expressly stated herein and is not to be read as extending, by implication or otherwise, to any other matter. We assume no obligation to advise any person of any change in fact or law that may come to our attention after the date hereof.

IX. Signature block

DRAFT — NOT FOR EXECUTION

This draft opinion has not been finalized, executed, or delivered. It is circulated for discussion purposes only and may not be relied upon by any person.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Douglas Carmichael

Title: Partner

Prepared by: Yuki Nakamura, Associate Carlos Espinoza, Associate

CALDERWOOD & HARKNESS LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 558-4000

Matter No. 1025-00007

DRAFT — FOR DISCUSSION PURPOSES ONLY — NOT FOR RELIANCE PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law
601 Lexington Avenue New York, New York 10022
Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
DRAFT — FOR DISCUSSION PURPOSES ONLY — NOT FOR RELIANCE
October 5, 2022
Quorum Receivables Funding 2022-1 LLC c/o Fortbridge Corporate Services LLC 1209 Orange Street Wilmington, Delaware 19801
Calvoneth Trust Company, National Association as Indenture Trustee 600 Travis Street, Suite 5800 Houston, Texas 77002
Ridgeline Capital Markets LLC as Initial Purchaser 383 Madison Avenue, 14th Floor New York, New York 10179
Re: Non-Consolidation Opinion — Quorum Receivables Holding LLC Matter No. 1025-00007
In connection with the issuance of $500,000,000 aggregate principal amount of asset-backed notes (the "Notes") by Quorum Receivables Funding 2022-1 LLC ("QRF 2022-1" or the "Issuer"), consisting of $375,000,000 Class A Notes, $75,000,000 Class B Notes, and $35,000,000 Class C Notes, and $15,000,000 Class R Residual Certificates
Ladies and Gentlemen:
I. Introduction and Purpose of Opinion
Calderwood & Harkness LLP ("we," "us," or "Calderwood & Harkness") has been engaged as issuer's counsel to Quorum Receivables Funding 2022-1 LLC, a Delaware limited liability company (the "Issuer" or "QRF 2022-1"), in connection with the above-referenced transaction (the "Transaction"). This opinion letter is being delivered in connection with the issuance by the Issuer of the Notes described above.
The purpose of this opinion is to opine that, in a hypothetical case under Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the "Bankruptcy Code"), in which Quorum Insurance Holdings Corp., a Delaware corporation ("QIH"), or Quorum Premium Finance LLC, a Delaware limited liability company ("QPF"), were to become a debtor, a bankruptcy court exercising proper jurisdiction would not order the substantive consolidation of Quorum Receivables Holding LLC, a Delaware limited liability company ("QRH"), with QIH or QPF, respectively or together.
QRH serves as the intermediate special purpose entity and depositor in the Transaction structure. In its capacity as depositor, QRH acquires insurance premium finance receivables (the "Receivables") from QPF under a Receivables Sale Agreement, dated as of October 12, 2022 (in execution draft form) (the "Receivables Sale Agreement"), and transfers such Receivables to QRF 2022-1 under a Receivables Transfer Agreement, dated as of October 12, 2022 (in execution draft form) (the "Receivables Transfer Agreement"). This two-step transfer structure is a fundamental feature of the Transaction and is designed to achieve true sale characterization and bankruptcy remoteness with respect to the Receivables transferred to the Issuer.
This opinion is being delivered in draft form, dated October 5, 2022, and has not been finalized. It is subject to further review and revision prior to any closing of the Transaction. This draft opinion is not intended for reliance in its current form and is circulated solely for discussion purposes among the addressees and their respective counsel. No party should take any action in reliance on this draft opinion.
II. Documents Reviewed
In rendering this opinion, we have reviewed originals or copies (certified or otherwise identified to our satisfaction) of the following documents (collectively, the "Reviewed Documents"):
1. Certificate of Formation of Quorum Receivables Holding LLC, filed with the Secretary of State of the State of Delaware on August 3, 2022 (Delaware Secretary of State File No. 7894228) (the "QRH Certificate of Formation").
2. Limited Liability Company Agreement of Quorum Receivables Holding LLC, dated as of August 3, 2022 (the "LLC Agreement"), by and between Quorum Premium Finance LLC, as sole member (the "Member"), and Eleanor M. Vasquez (designated by Fortbridge Corporate Services LLC), as independent manager (the "Independent Manager").
3. Independent Manager Agreement, dated as of August 3, 2022 (the "Independent Manager Agreement"), by and between QRH and Fortbridge Corporate Services LLC ("Fortbridge"), pursuant to which Fortbridge has agreed to provide Eleanor M. Vasquez as independent manager of QRH.
4. Receivables Sale Agreement (execution draft v3, dated October 12, 2022), by and between QPF, as seller, and QRH, as purchaser (the "Receivables Sale Agreement").
5. Receivables Transfer Agreement (execution draft v3, dated October 12, 2022), by and between QRH, as transferor, and QRF 2022-1, as transferee (the "Receivables Transfer Agreement").
6. Indenture (execution draft v4, dated October 12, 2022) (the "Indenture"), by and between QRF 2022-1, as issuer, and Calvoneth Trust Company, National Association ("Calvoneth Trust" or the "Indenture Trustee"), as trustee.
7. Draft UCC-1 Financing Statement naming QPF, as debtor, and QRH, as secured party, to be filed with the Secretary of State of the State of Delaware.
8. Draft UCC-1 Financing Statement naming QRH, as debtor, and QRF 2022-1, as secured party, to be filed with the Secretary of State of the State of Delaware.
9. Secretary's Certificate of Quorum Insurance Holdings Corp., dated July 27, 2022, certifying resolutions adopted by the Board of Directors of QIH authorizing the Transaction and the execution and delivery of the Transaction Documents to which QIH is a party.
10. Manager's Certificate of Quorum Premium Finance LLC, dated July 27, 2022, certifying resolutions adopted by the managers of QPF authorizing the Transaction and the execution and delivery of the Transaction Documents to which QPF is a party.
11. Certificate of Formation of Quorum Insurance Holdings Corp., as amended through the date hereof, the Amended and Restated Certificate of Incorporation of QIH, and the Bylaws of QIH, each as currently in effect; the Certificate of Formation of QPF, as filed with the Delaware Secretary of State, and the Limited Liability Company Agreement of QPF, each as currently in effect.
12. Preliminary Offering Memorandum (v3), dated October 12, 2022, prepared in connection with the offering and sale of the Notes (the "Offering Memorandum").
13. Such other documents, records, certificates, instruments, and matters of law as we have deemed necessary or appropriate for purposes of rendering this opinion, including the Account Control Agreement among QRF 2022-1, Calvoneth Trust, and Northvane Bank, N.A., the Administration Agreement between QRF 2022-1 and QIH, the Servicing Agreement among QRF 2022-1, QPF (as servicer), and Northvane Bank, N.A. (as back-up servicer), and the Performance Guaranty from QIH in favor of Calvoneth Trust.
The documents described in items (4) through (8) and (12) above, together with the Indenture, the Account Control Agreement, the Administration Agreement, the Servicing Agreement, and the Performance Guaranty, are collectively referred to herein as the "Transaction Documents."
We note that certain of the documents reviewed, including the Receivables Sale Agreement, the Receivables Transfer Agreement, the Indenture, and the Offering Memorandum, are in execution draft form and have not been finally executed and delivered. This opinion assumes that such documents will be executed and delivered in substantially the form reviewed by us, and that any changes to such documents between the date of this draft opinion and the date of execution will not be material to the analysis set forth herein. If any such documents are revised in a manner that is material to the matters addressed in this opinion, we reserve the right to modify, supplement, or withdraw this opinion.
III. Factual Background
A. QRH — Formation and Purpose
Quorum Receivables Holding LLC is a Delaware limited liability company formed on August 3, 2022, pursuant to the filing of its Certificate of Formation with the Secretary of State of the State of Delaware (Delaware Secretary of State File No. 7894228). QRH's registered agent in the State of Delaware is Ashgrove Services Inc., located at 28 Liberty Street, New York, New York 10005. QRH's federal employer identification number is 88-1247619.
The sole member of QRH is Quorum Premium Finance LLC, a Delaware limited liability company with a federal employer identification number of 84-2653198. QPF is, in turn, a wholly owned subsidiary of Quorum Insurance Holdings Corp., a Delaware corporation that is publicly traded on the New York Stock Exchange under the ticker symbol "QIHC" (federal employer identification number 82-4391067). QIH is headquartered at 400 Atlantic Street, Suite 2200, Stamford, Connecticut 06901.
QRH was formed for the limited purpose of acquiring insurance premium finance receivables from QPF and transferring such receivables to QRF 2022-1 in connection with the Transaction and similar securitization transactions. QRH's Certificate of Formation and LLC Agreement restrict QRH's activities to those related to its stated limited purpose. QRH does not, and is not permitted to, engage in any business other than the acquisition, holding, and transfer of Receivables and the execution, delivery, and performance of the Transaction Documents.
QRH serves as the intermediate special purpose entity and depositor in a two-step transfer structure. This structure is designed to achieve true sale characterization and bankruptcy remoteness for the benefit of the Noteholders and the other Transaction parties. In the first step, QPF sells the Receivables to QRH pursuant to the Receivables Sale Agreement. In the second step, QRH transfers the Receivables to QRF 2022-1 pursuant to the Receivables Transfer Agreement. The two-step structure interposes QRH between QPF (the originator) and QRF 2022-1 (the issuer), providing an additional layer of insulation against the risk that a bankruptcy filing by QPF or QIH could result in the Receivables being treated as property of the estate of QPF or QIH or in the substantive consolidation of QRF 2022-1 with QPF or QIH.
B. The Transaction Structure
QPF originates insurance premium finance loans to commercial policyholders across all fifty states and the District of Columbia. As of the date hereof, QPF's total outstanding portfolio of insurance premium finance receivables is approximately $2.1 billion. QPF is one of the largest independent insurance premium finance lenders in the United States and has been originating insurance premium finance loans since 2015.
Under the Receivables Sale Agreement, QPF sells, on a revolving basis, eligible Receivables to QRH. The purchase price for such Receivables consists of cash and a deferred purchase price component, structured to reflect fair value consideration for the Receivables sold. Under the Receivables Transfer Agreement, QRH transfers the Receivables so acquired to QRF 2022-1. QRF 2022-1, in turn, issues the Notes, which are backed by a revolving pool of Receivables. The initial pool balance, as of the cut-off date of June 30, 2022, is approximately $612,000,000.
The Notes consist of $375,000,000 aggregate principal amount of Class A Notes, $75,000,000 aggregate principal amount of Class B Notes, and $35,000,000 aggregate principal amount of Class C Notes. The Class A Notes are expected to receive preliminary ratings of "AAA" from Brindoval Ratings and "Aaa" from Pinnacle Rating Services. The Class B Notes are expected to receive preliminary ratings of "AA" and "Aa2," respectively, and the Class C Notes are expected to receive preliminary ratings of "A" and "A2," respectively. In addition, $15,000,000 of Class R Residual Certificates will be issued and retained by QRH or an affiliate thereof.
The two-step transfer structure (QPF → QRH → QRF 2022-1) is designed to insulate QRF 2022-1 from the consequences of a bankruptcy filing by QPF or QIH. By interposing QRH as an intermediate depositor — a separate, bankruptcy-remote special purpose entity — the Transaction structure provides an additional layer of protection for the Noteholders. Even if a bankruptcy court were to recharacterize the sale from QPF to QRH as a secured financing (a conclusion we do not reach and that is addressed in a separate true sale opinion), the existence of QRH as a separate, bankruptcy-remote entity would still provide protection against the substantive consolidation of QRF 2022-1 with QPF or QIH.
C. QIH and QPF — Relationship to QRH
Quorum Insurance Holdings Corp. is the ultimate parent entity in the corporate structure. QIH is a publicly traded Delaware corporation listed on the New York Stock Exchange under the ticker symbol "QIHC." QIH's principal executive officers include Marcus Devereaux (Chief Executive Officer), Priya Raghavan (Chief Financial Officer), Nolan Whitford (General Counsel and Secretary), and Sandra Ling-Hwang (Treasurer and Senior Vice President, Premium Finance).
For the fiscal year ended December 31, 2021, QIH reported consolidated revenue of approximately $3.8 billion. QIH's business operations encompass three principal segments: (i) property and casualty insurance distribution, (ii) premium finance lending (conducted through QPF and its subsidiaries), and (iii) insurtech software-as-a-service platforms. QIH is a well-capitalized, investment-grade rated enterprise with significant operations and assets independent of the Transaction.
QPF is the originator and servicer of the insurance premium finance receivables that form the collateral pool underlying the Notes. QPF is managed by Sandra Ling-Hwang, who serves as QPF's sole manager. QPF is a Delaware limited liability company and a wholly owned subsidiary of QIH. QPF serves as the initial servicer of the Receivables pursuant to the Servicing Agreement, with Northvane Bank, N.A. acting as back-up servicer.
QPF is the sole member of QRH but has limited governance rights with respect to QRH, subject to the provisions of the LLC Agreement and the independent manager protections described herein. In particular, QPF may not, without the affirmative vote of the Independent Manager, cause QRH to file a voluntary petition under the Bankruptcy Code, dissolve, merge or consolidate with any other entity, or amend the LLC Agreement in any manner that would adversely affect the separateness covenants or the independent manager requirements.
IV. Assumptions
In rendering this opinion, we have assumed the following (each, an "Assumption"), each of which we have not independently verified:
1. Execution and Delivery. All documents reviewed by us in connection with this opinion, including the Transaction Documents, will be duly executed and delivered by all parties thereto in substantially the form reviewed by us, and any changes to such documents between the date of this draft opinion and the date of execution will not be material to the analysis set forth herein.
2. Compliance with Separateness Covenants. The separateness covenants and operational requirements set forth in QRH's LLC Agreement (as described in Section V.B.3 below) will be observed and complied with by QRH, QPF, and their respective officers, managers, agents, and representatives at all times from and after the date of formation of QRH.
3. Independent Manager. QRH will at all times maintain an independent manager who satisfies the eligibility criteria set forth in the LLC Agreement and the Independent Manager Agreement. As of the date hereof, the independent manager is Eleanor M. Vasquez, designated by Fortbridge Corporate Services LLC (1209 Orange Street, Wilmington, Delaware 19801). QRH will not take any "Special Member Action" (as defined in the LLC Agreement), including the filing of a voluntary petition under the Bankruptcy Code, the dissolution, merger, or consolidation of QRH, or the amendment of the separateness covenants or independent manager provisions of the LLC Agreement, without the prior affirmative vote or written consent of the Independent Manager. In the event that Ms. Vasquez is unable or unwilling to serve, a qualified successor will be promptly appointed by Fortbridge in accordance with the terms of the Independent Manager Agreement.
4. Separate Books and Records. QRH will maintain its own books and records, separate and apart from the books and records of QIH, QPF, and any other affiliate. QRH's financial statements, to the extent prepared, will be prepared separately from those of QIH and QPF, although QRH's financial results may be included in QIH's consolidated financial statements in accordance with generally accepted accounting principles.
5. Separate Bank Accounts; No Commingling. QRH will maintain separate bank accounts and will not commingle its assets, funds, or accounts with those of QIH, QPF, or any other affiliate. All collections on the Receivables will be deposited into accounts maintained in the name of QRF 2022-1 or QRH, as applicable, and will be subject to the control of Calvoneth Trust as securities intermediary pursuant to the Account Control Agreement.
6. Separate Identity. QRH will hold itself out to third parties, including creditors, contract counterparties, governmental authorities, and the public, as a legal entity separate and apart from QIH, QPF, and their respective affiliates. QRH will use its own stationery, invoices, and other business documents, and will not represent itself as a division, department, or branch of QIH, QPF, or any affiliate.
7. Observance of Formalities. QRH will observe all limited liability company formalities required under the Delaware Limited Liability Company Act (6 Del. C. §§ 18-101 et seq.) and QRH's LLC Agreement, including the maintenance of minutes or records of actions taken by the member and the independent manager.
8. True Sale. The transfers of Receivables from QPF to QRH under the Receivables Sale Agreement will constitute "true sales" for purposes of federal bankruptcy law, such that the Receivables so transferred will not be property of the estate of QPF in a case under the Bankruptcy Code. We note that a separate true sale opinion addressing this characterization is being prepared by this firm and is expected to be dated on or about October 8, 2022. We express no opinion herein as to the true sale characterization of any transfer.
9. Adequate Capitalization. QRH will maintain adequate capitalization relative to its contemplated business activities, including its obligations under the Transaction Documents, and will not be rendered insolvent by the transactions contemplated hereby.
10. UCC Filings. All UCC-1 financing statements referenced herein, including the financing statement naming QPF as debtor and QRH as secured party and the financing statement naming QRH as debtor and QRF 2022-1 as secured party, will be properly filed with the Secretary of State of the State of Delaware and will be timely maintained through the filing of continuation statements as required under Article 9 of the Uniform Commercial Code.
11. Compliance with Transaction Documents. QRH, QPF, QIH, and each other party to the Transaction Documents will comply in all material respects with all representations, warranties, and covenants made by them in the Transaction Documents.
12. Accuracy of Factual Representations. The factual representations and certificates provided by officers and managers of QIH and QPF, including the Secretary's Certificate of QIH dated July 27, 2022, and the Manager's Certificate of QPF dated July 27, 2022, are true, correct, and complete in all material respects as of the dates thereof and will remain true, correct, and complete in all material respects as of the closing date of the Transaction.
If any of the foregoing Assumptions proves to be incorrect, incomplete, or otherwise not satisfied, this opinion may be materially affected, and we express no opinion with respect to the matters addressed herein to the extent any such Assumption is not satisfied.
V. Legal Analysis
A. Substantive Consolidation Doctrine — Overview
Substantive consolidation is an equitable remedy available in bankruptcy proceedings. Although not expressly authorized by any specific provision of the Bankruptcy Code, courts have recognized substantive consolidation as an exercise of the bankruptcy court's general equitable powers under Section 105(a) of the Bankruptcy Code, which provides that "[t]he court may 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). The doctrine has also been grounded, in some decisions, in Section 1123(a)(5)(C) of the Bankruptcy Code, which permits a plan of reorganization to provide for the "merger or consolidation of the debtor with one or more persons."
The effect of substantive consolidation is dramatic: the assets and liabilities of two or more entities are pooled and treated as though they constituted a single bankruptcy estate. Upon consolidation, intercompany claims are eliminated, and the creditors of each consolidated entity share pro rata in the combined pool of assets. Because substantive consolidation disregards the separate legal existence of distinct entities — entities that were formed and operated as separate legal persons — courts have consistently emphasized that it is an extraordinary remedy that should be applied sparingly and only in extreme circumstances. See, e.g., In re Owens Ashgrove Partners LLC, 419 F.3d 195, 211 (3d Cir. 2005) ("Substantive consolidation . . . is extreme and . . . its boundaries must be respected."); In re Augie/Restivo Baking Co., Ltd., 860 F.2d 515, 518 (2d Cir. 1988) ("The power to consolidate should be used sparingly.").
Two principal judicial frameworks have emerged for evaluating requests for substantive consolidation:
The *Augie/Restivo* Test (Second Circuit). In In re Augie/Restivo Baking Co., Ltd., 860 F.2d 515 (2d Cir. 1988), the United States Court of Appeals for the Second Circuit articulated a two-pronged test under which substantive consolidation is warranted only where:
(i) creditors dealt with the entities as a single economic unit and did not rely on the separate identity of any individual entity in extending credit (the "reliance" prong); or
(ii) the affairs of the debtors are so entangled that consolidation will benefit all creditors because separating the entities' assets and liabilities is impracticable or would result in undue expense and delay (the "entanglement" prong).
The Second Circuit emphasized that substantive consolidation is not a mere convenience but rather an equitable remedy of last resort, and that either prong must be established by clear and convincing evidence. The court further noted that the proponent of consolidation bears the burden of demonstrating that the standard is met, and that the remedy should be denied if there is a "reasonable possibility" that creditors relied on the separate existence of the entities. Augie/Restivo, 860 F.2d at 518-19.
The *Owens Ashgrove Partners LLC* Test (Third Circuit). In In re Owens Ashgrove Partners LLC, 419 F.3d 195 (3d Cir. 2005), the United States Court of Appeals for the Third Circuit adopted a more stringent standard. The Third Circuit held that substantive consolidation is warranted only where:
(i) the entities' assets and liabilities are so scrambled that separating them is "prohibitive and unavoidable," meaning that the costs of untangling the interrelationship exceed the benefits; or
(ii) creditors relied on the consolidated creditworthiness of the entities rather than on the separate existence and individual creditworthiness of any single entity in extending credit (the "reliance" prong).
The Third Circuit emphasized several key principles. First, substantive consolidation is a remedy in equity and "its application is necessarily driven by the equities of the specific case." Owens Ashgrove Partners LLC, 419 F.3d at 211. Second, the remedy should not be used to disadvantage creditors who extended credit in reliance on the separate existence and separate credit of a particular entity. Third, the mere existence of a parent-subsidiary relationship, common management, or intercompany transactions does not, standing alone, justify consolidation. Fourth, the proponent of consolidation bears a heavy burden, and any "credible objection" by a party that has relied on the separate existence of the entities weighs against consolidation.
Applicable Standard. Because QRH is a Delaware limited liability company, a bankruptcy case involving QRH would likely be commenced in the United States Bankruptcy Court for the District of Delaware, which sits within the Third Circuit. Accordingly, the Owens Ashgrove Partners LLC standard would likely be the applicable framework for evaluating any substantive consolidation motion. However, we analyze QRH's separateness under both the Third Circuit (Owens Ashgrove Partners LLC) and Second Circuit (Augie/Restivo) standards below.
Under either test, the party seeking substantive consolidation bears a heavy burden, and courts have consistently declined to order consolidation where, as here, the entities in question maintain separate legal existence, separate books and records, separate assets, and arm's-length relationships, and where creditors have extended credit in reliance on the separate identity and creditworthiness of the entity in question.
B. Analysis of Separateness Factors — QRH vis-à-vis QIH and QPF
We have analyzed the following factors, which courts have identified as relevant to the substantive consolidation inquiry, in assessing whether a court would order the substantive consolidation of QRH with QIH or QPF.
1. Separate Legal Existence and Formation
QRH is a separate legal entity, duly formed as a Delaware limited liability company on August 3, 2022, by the filing of its Certificate of Formation with the Secretary of State of the State of Delaware (Delaware Secretary of State File No. 7894228). QRH has its own federal employer identification number (88-1247619), its own Certificate of Formation, and its own LLC Agreement. QRH has its own registered agent (Ashgrove Services Inc., 28 Liberty Street, New York, New York 10005), which is distinct from the registered agents of QIH and QPF.
QRH was formed for a specific, limited purpose: the acquisition of insurance premium finance receivables from QPF and the transfer of such receivables to QRF 2022-1 or similar issuance vehicles. QRH's Certificate of Formation and LLC Agreement expressly restrict QRH's activities to those related to this limited purpose. The formation of QRH as a separate legal entity with a distinct Certificate of Formation, distinct organizational documents, and a distinct EIN weighs strongly against any finding that QRH is a mere alter ego or instrumentality of QIH or QPF.
2. Independent Manager / Governance
A critical element of QRH's bankruptcy-remote structure is the requirement that QRH maintain, at all times, an independent manager. Pursuant to the LLC Agreement and the Independent Manager Agreement, Fortbridge Corporate Services LLC (1209 Orange Street, Wilmington, Delaware 19801) has designated Eleanor M. Vasquez as the Independent Manager of QRH. Ms. Vasquez is not, and has never been, an employee, officer, director, member, partner, manager, or affiliate of QIH, QPF, or any of their respective subsidiaries or affiliates (other than QRH, in her capacity as Independent Manager). Ms. Vasquez has no financial interest in, or economic dependence upon, QIH, QPF, or any of their affiliates (other than the fees payable to Fortbridge under the Independent Manager Agreement).
Under the LLC Agreement, certain enumerated "Special Member Actions" require the prior affirmative vote or written consent of the Independent Manager. These Special Member Actions include, without limitation:
(a) the filing of a voluntary petition by QRH under the Bankruptcy Code or any analogous state insolvency proceeding;
(b) the dissolution, liquidation, or winding up of QRH;
(c) the merger, consolidation, or combination of QRH with or into any other entity;
(d) the sale of all or substantially all of QRH's assets, other than as contemplated by the Transaction Documents;
(e) the amendment, modification, or waiver of any provision of the LLC Agreement relating to the separateness covenants, the independent manager requirement, or the Special Member Actions;
(f) the incurrence by QRH of any indebtedness, other than as expressly contemplated by the Transaction Documents; and
(g) the taking of any action that would cause QRH to be treated other than as an entity separate from QIH, QPF, and their respective affiliates.
This governance mechanism ensures that QPF, as the sole member of QRH, cannot unilaterally cause QRH to file a voluntary bankruptcy petition or take any other action that would undermine QRH's separate existence or bankruptcy remoteness. The independent manager requirement is a well-established feature of bankruptcy-remote special purpose entity structures and has been recognized by courts and rating agencies as a significant factor supporting the separateness and bankruptcy remoteness of such entities.
3. Separateness Covenants in the LLC Agreement
The LLC Agreement contains comprehensive separateness covenants that QRH is required to observe at all times. These covenants are designed to ensure that QRH maintains its status as a separate legal entity and are a central feature of the bankruptcy-remote structure. The separateness covenants include the following:
(a) Separate Books and Records. QRH shall maintain its own books and records, separate and distinct from the books and records of QIH, QPF, and each of their respective affiliates. To the extent that QRH's financial results are included in the consolidated financial statements of QIH in accordance with generally accepted accounting principles, such consolidated financial statements shall contain a footnote or other disclosure indicating that QRH is a separate legal entity whose assets are not available to satisfy the obligations of QIH, QPF, or any other affiliate.
(b) Separate Bank Accounts; No Commingling. QRH shall maintain its own bank accounts, separate and distinct from the bank accounts of QIH, QPF, and each of their respective affiliates. QRH shall not commingle its funds, assets, or accounts with those of QIH, QPF, or any other person or entity. All collections and proceeds relating to the Receivables shall be deposited into segregated accounts in the name of QRH or QRF 2022-1, as applicable.
(c) No Cross-Guarantees. QRH shall not guarantee, assume, or become obligated on the debts, liabilities, or obligations of QIH, QPF, or any other affiliate, and neither QIH, QPF, nor any other affiliate shall guarantee, assume, or become obligated on the debts, liabilities, or obligations of QRH, except as expressly provided in the Transaction Documents.
(d) Separate Identity. QRH shall hold itself out to third parties, including creditors, contract counterparties, governmental authorities, and the public, as a legal entity separate and apart from QIH, QPF, and their respective affiliates. QRH shall use its own stationery, invoices, checks, and other business documents, and shall not hold itself out as a division, department, or branch of QIH, QPF, or any other person or entity.
(e) Own Expenses. QRH shall pay its own liabilities, costs, and expenses from its own funds, and shall not pay or satisfy the liabilities, costs, or expenses of QIH, QPF, or any other affiliate from QRH's funds (except for reasonable allocations of shared overhead costs, to the extent documented and conducted on arm's-length terms).
(f) Own Name. QRH shall conduct its business in its own name, and shall not transact business or enter into contracts in the name of QIH, QPF, or any other affiliate.
(g) No Credit Support. QRH shall not hold out its credit or assets as being available to satisfy the obligations of QIH, QPF, or any other person or entity. QRH shall not pledge its assets to secure the obligations of any other person or entity.
(h) Arm's-Length Relationships. QRH shall maintain arm's-length relationships with QIH, QPF, and their respective affiliates. All transactions between QRH and any affiliate shall be on terms and conditions that are no less favorable to QRH than those that would be obtained in a comparable arm's-length transaction with an unrelated third party.
(i) Tax Treatment. QRH shall file its own tax returns to the extent required by applicable law, or, if QRH is properly treated as a disregarded entity of QPF for federal and state income tax purposes, such treatment shall be maintained in a manner consistent with QRH's separateness for bankruptcy and other non-tax purposes. QRH's tax characterization as a disregarded entity does not affect its status as a separate legal entity under state organizational law or for bankruptcy purposes. See 6 Del. C. § 18-201(b) (a Delaware LLC has a legal existence separate from its members).
(j) Adequate Capital. QRH shall maintain adequate capital in light of its contemplated business activities and obligations under the Transaction Documents, and shall not make any distribution to its member that would render QRH unable to pay its debts as they come due.
(k) No Affiliate Obligations. QRH shall not acquire any obligations or securities of its member, QIH, or any other affiliate, except as expressly contemplated by the Transaction Documents.
(l) Correction of Misunderstandings. QRH shall take all reasonable steps to correct any known misunderstanding regarding its separate identity, including any misunderstanding by creditors, counterparties, or governmental authorities.
The foregoing separateness covenants, taken together, are comprehensive and consistent with market practice for bankruptcy-remote special purpose entities used in securitization transactions. Compliance with these covenants is essential to maintaining QRH's separate legal identity and to supporting the conclusion that a court would not order substantive consolidation of QRH with QIH or QPF.
4. Non-Petition Covenant
The LLC Agreement contains a covenant by QPF, as the sole member of QRH, not to file or join in the filing of any involuntary petition under the Bankruptcy Code (or any analogous state insolvency proceeding) against QRH. The LLC Agreement also contains a covenant by QRH not to file a voluntary petition under the Bankruptcy Code (or any analogous state insolvency proceeding) without the prior affirmative vote or written consent of the Independent Manager (currently, Eleanor M. Vasquez).
These non-petition covenants are a standard and well-established feature of bankruptcy-remote special purpose entity structures. Under Delaware law, provisions in an LLC agreement restricting the authority of members or managers to take specified actions, including the filing of a bankruptcy petition, are generally enforceable. See 6 Del. C. § 18-1101(b) ("It is the policy of [the Delaware LLC Act] to give the maximum effect to the principle of freedom of contract and to the enforceability of limited liability company agreements."). While there is limited case law addressing the enforceability of non-petition covenants in the specific context of Delaware LLCs, the weight of authority supports the enforceability of such provisions, particularly where the covenant is accompanied by the independent manager requirement and is a condition on which third-party creditors (such as the Noteholders) have relied in extending credit. See also In re Kingston Square Associates, 214 B.R. 713, 725 (Bankr. S.D.N.Y. 1997) (discussing enforceability of blocking provisions in SPV structures).
5. Limited Purpose and Activities
As described above, QRH's LLC Agreement restricts QRH's activities to those related to the acquisition, holding, and transfer of Receivables and the execution, delivery, and performance of the Transaction Documents. QRH may not engage in any business or activity other than its stated limited purpose. This restriction ensures that QRH does not accumulate extraneous assets, liabilities, or business relationships that could create the appearance of entanglement with QIH or QPF.
QRH has no employees. All administrative functions necessary for QRH's operations are performed by QIH, acting as administrator under the Administration Agreement, for which QIH receives a market-rate administration fee. QRH does not maintain its own office space; its business address is the office of its registered agent or, as applicable, the office of QIH as administrator. These arrangements are consistent with market practice for depositor entities in securitization transactions and do not undermine QRH's separate legal existence.
QRH does not incur indebtedness except as expressly contemplated by the Transaction Documents. QRH's only significant liabilities are its obligations under the Receivables Transfer Agreement, the Administration Agreement, and incidental operating expenses. QRH's limited purpose and restricted activities ensure that the entity remains a "clean" vehicle with readily identifiable assets and liabilities, which is a critical factor in the substantive consolidation analysis.
6. Asset Segregation / True Sale
A central feature of the Transaction structure is the treatment of the transfer of Receivables from QPF to QRH as a "true sale" — i.e., as a sale or absolute transfer of the Receivables, rather than a secured loan or other financing. If the true sale characterization is respected, the Receivables transferred to QRH would not constitute property of QPF's bankruptcy estate under Section 541 of the Bankruptcy Code, and QPF's creditors would not be able to reach those Receivables.
The characterization of the QPF-to-QRH transfer as a true sale is supported by a separate true sale opinion being prepared by this firm, expected to be dated on or about October 8, 2022. We express no opinion herein as to the true sale characterization of any transfer; however, we have assumed, for purposes of this non-consolidation opinion, that the transfers will constitute true sales.
As a precautionary measure, a UCC-1 financing statement will be filed with the Secretary of State of the State of Delaware naming QPF as debtor and QRH as secured party, covering the Receivables transferred under the Receivables Sale Agreement. This precautionary filing is designed to protect QRH's interest in the Receivables in the event that a court were to recharacterize the transfer as a secured financing rather than a true sale. In addition, the Receivables Sale Agreement contains a back-up security interest grant by QPF in favor of QRH, which would grant QRH a perfected security interest in the Receivables in the event of recharacterization.
The economic terms of the sale are structured to provide reasonably equivalent value for the Receivables sold. The purchase price consists of a cash component (funded from the proceeds of QRH's transfer of the Receivables to QRF 2022-1) and a deferred purchase price component. The provision of reasonably equivalent value reduces the risk that the transfer could be challenged as a fraudulent conveyance under Sections 548 or 544(b) of the Bankruptcy Code.
7. No Commingling of Assets
QRH's assets — consisting principally of the Receivables and the proceeds thereof — are at all times segregated from the assets of QIH and QPF. QRH maintains separate bank accounts, and funds belonging to QRH are not deposited into or held in accounts belonging to QIH, QPF, or any other affiliate.
Collections on the Receivables flow through designated collection accounts and are ultimately deposited into accounts maintained in the name of QRF 2022-1 or QRH, as applicable. These accounts are subject to the control of Calvoneth Trust Company, N.A., acting as securities intermediary under the Account Control Agreement. The Account Control Agreement establishes Calvoneth Trust's exclusive control over the relevant accounts, ensuring that neither QPF nor QIH can access or divert the collections without the consent of Calvoneth Trust.
The segregation of QRH's assets from those of QIH and QPF, and the establishment of independent control over the collection accounts, are critical features of the bankruptcy-remote structure. These features ensure that QRH's assets and liabilities are readily identifiable and separable from those of QIH and QPF, which is directly relevant to the "scrambling" prong of the Owens Ashgrove Partners LLC test and the "entanglement" prong of the Augie/Restivo test.
8. Third-Party Reliance on Separate Identity
A key factor in the substantive consolidation analysis is whether creditors and other transaction counterparties have relied on the separate identity and creditworthiness of the entity in question, as opposed to the consolidated creditworthiness of the entity and its affiliates.
In this case, the evidence of separate-entity reliance is compelling. Each of the principal transaction counterparties — including the Noteholders, Calvoneth Trust Company, N.A. (as Indenture Trustee), Northvane Bank, N.A. (as back-up servicer and liquidity provider), and Ridgeline Capital Markets LLC (as initial purchaser) — deals with QRH and QRF 2022-1 as legal entities separate and distinct from QIH and QPF. The Transaction Documents are structured to emphasize the separateness of these entities, and each counterparty's decision to participate in the Transaction is predicated, in significant part, on the bankruptcy remoteness and separateness of the SPV structure.
The preliminary ratings assigned by Brindoval Ratings and Pinnacle Rating Services are expressly predicated on the bankruptcy remoteness and separateness of the SPV structure. The rating agencies' analyses assume that QRH and QRF 2022-1 are separate legal entities whose assets would not be subject to the claims of QIH's or QPF's creditors in the event of a bankruptcy filing by either of those entities. Any failure to maintain QRH's separateness could result in a downgrade or withdrawal of the ratings assigned to the Notes.
The Offering Memorandum will disclose the separate existence of QRH and its bankruptcy-remote features, including the separateness covenants, the independent manager requirement, and the non-petition covenants. Prospective purchasers of the Notes will be informed that the Transaction structure is designed to ensure that the Receivables are insulated from the bankruptcy risk of QIH and QPF, and that QRH is a separate legal entity that is not expected to be substantively consolidated with QIH or QPF.
Accordingly, creditors of QRH and QRF 2022-1 are expected to rely — and, based on the structure of the Transaction, will have every reason to rely — on the separate identity, separate assets, and separate creditworthiness of QRH and QRF 2022-1, rather than on the consolidated credit of QIH or QPF. This separate-entity reliance is directly relevant to the "reliance" prong of both the Owens Ashgrove Partners LLC and Augie/Restivo tests and weighs strongly against any finding that substantive consolidation is warranted.
C. Entanglement Analysis
In evaluating whether substantive consolidation is appropriate, courts examine whether the affairs of the entities in question are so entangled that consolidation would benefit all creditors by avoiding the prohibitive cost and difficulty of separating the entities' assets and liabilities. Under the Third Circuit's Owens Ashgrove Partners LLC test, the relevant inquiry is whether the entities' assets and liabilities are so "scrambled" that separating them is "prohibitive and unavoidable." Under the Second Circuit's Augie/Restivo test, the relevant inquiry is whether the entities' affairs are so "entangled" that consolidation will benefit all creditors.
Based on our review of the Reviewed Documents and the Assumptions set forth herein, we conclude that the affairs of QRH are not so entangled with those of QIH or QPF as to warrant substantive consolidation under either framework. The following factors support this conclusion:
• QRH's books and records are maintained separately from those of QIH and QPF, and QRH's assets and liabilities are readily identifiable and separable from those of QIH and QPF.
• QRH maintains separate bank accounts, and its funds are not commingled with those of QIH, QPF, or any other affiliate.
• QRH does not guarantee, assume, or become obligated on the debts or liabilities of QIH or QPF, and neither QIH nor QPF guarantees, assumes, or becomes obligated on the debts or liabilities of QRH (except as expressly provided in the Transaction Documents).
• QRH's assets consist solely of the Receivables acquired from QPF and the proceeds thereof. These assets are clearly identifiable and are not commingled with the assets of QIH or QPF.
• QRH's liabilities consist solely of its obligations under the Transaction Documents and incidental operating expenses. These liabilities are clearly identifiable and do not overlap with the liabilities of QIH or QPF.
• The only intercompany transactions involving QRH are those contemplated by the Transaction Documents (i.e., the purchase of Receivables from QPF and the transfer of Receivables to QRF 2022-1). These transactions are conducted on arm's-length terms and are fully documented in the Transaction Documents.
• There are no cross-guarantees or cross-collateralization arrangements between QRH and QIH or QPF (except as expressly provided in the Transaction Documents). We note that QIH has executed a Performance Guaranty in favor of Calvoneth Trust, pursuant to which QIH guarantees certain performance obligations of QPF as servicer. This guaranty runs from QIH to Calvoneth Trust and does not create any obligation of QRH to QIH or any basis for the consolidation of QRH's assets and liabilities with those of QIH. The Performance Guaranty is a credit enhancement for the benefit of the Noteholders and does not blur the separateness of QRH.
• There is no evidence, nor is there any expectation, of intercompany transfers between QRH and QIH or QPF outside the scope of the Transaction Documents.
Accordingly, the affairs of QRH are not so entangled with those of QIH or QPF that separation would be prohibitively difficult or would fail to benefit creditors. To the contrary, QRH's assets and liabilities are readily identifiable and separable, and the costs of maintaining the entities' separate existence are minimal.
D. Third Circuit / Delaware Analysis (*Owens Ashgrove Partners LLC* Framework)
Because QRH is a Delaware limited liability company, a bankruptcy case involving QRH, QIH, or QPF (to the extent filed in Delaware) would likely be subject to the precedent of the Third Circuit, including the Owens Ashgrove Partners LLC decision. Accordingly, we analyze the propriety of substantive consolidation under the Owens Ashgrove Partners LLC framework.
Prong 1: Scrambling of Assets. The first prong of the Owens Ashgrove Partners LLC test requires a showing that the entities' assets and liabilities are so scrambled that separating them is "prohibitive and unavoidable." Owens Ashgrove Partners LLC, 419 F.3d at 211. As discussed in detail above, QRH's assets (the Receivables and the proceeds thereof) are clearly identifiable and are at all times segregated from the assets of QIH and QPF. QRH maintains separate bank accounts, does not commingle funds with QIH or QPF, and does not have any assets that are intermingled with, or inseparable from, the assets of QIH or QPF. QRH's liabilities are similarly discrete and limited to its obligations under the Transaction Documents and incidental operating expenses. There is no scrambling of assets or liabilities that would make separation prohibitive or unavoidable.
Prong 2: Creditor Reliance. The second prong of the Owens Ashgrove Partners LLC test requires a showing that creditors relied on the consolidated creditworthiness of the entities rather than on the separate existence and individual creditworthiness of any single entity. As discussed above, the Noteholders, Calvoneth Trust, Northvane Bank, Ridgeline Capital Markets, and the rating agencies each deal with QRH as a separate legal entity and rely on the bankruptcy remoteness and separateness of the SPV structure. The Transaction is expressly designed to ensure that creditors extend credit in reliance on the separate assets of QRF 2022-1 and the bankruptcy-remote features of the structure, not on the consolidated creditworthiness of QIH or QPF. There is no basis for a finding that creditors relied on the consolidated credit of QIH, QPF, and QRH.
Conclusion. Based on our analysis, we believe that a court applying the Third Circuit's Owens Ashgrove Partners LLC standard would not order the substantive consolidation of QRH with QIH or QPF. Neither prong of the Owens Ashgrove Partners LLC test is satisfied, and the equities strongly favor respecting the separate legal existence of QRH.
E. Second Circuit Analysis (*Augie/Restivo* Framework)
Although we believe that the Third Circuit's Owens Ashgrove Partners LLC standard is the more likely applicable framework, we also analyze the propriety of substantive consolidation under the Second Circuit's Augie/Restivo standard.
Prong 1: Single Economic Unit / No Separate Reliance. The first prong of the Augie/Restivo test asks whether, prepetition, creditors dealt with the entities as a single economic unit and did not rely on the separate identity of any individual entity in extending credit. As discussed above, the Transaction is structured to ensure that creditors of QRH and QRF 2022-1 deal with those entities as separate legal persons, distinct from QIH and QPF. The Transaction Documents, the Offering Memorandum, and the rating agency analyses all emphasize the separateness of QRH and QRF 2022-1. There is no basis for a finding that creditors treated QRH, QIH, and QPF as a single economic unit or failed to rely on QRH's separate identity.
Prong 2: Entanglement Benefiting All Creditors. The second prong of the Augie/Restivo test asks whether the affairs of the entities are so entangled that consolidation will benefit all creditors. As discussed in Section V.C above, QRH's affairs are not entangled with those of QIH or QPF. QRH's assets and liabilities are readily identifiable and separable, and consolidation would not benefit all creditors. To the contrary, substantive consolidation of QRH with QIH or QPF would harm the Noteholders by subjecting the Receivables (which are held by QRF 2022-1, having been transferred from QRH) to the claims of QIH's or QPF's general unsecured creditors, thereby diluting the Noteholders' recovery and undermining the very structure on which the Noteholders relied in purchasing the Notes.
Conclusion. Based on our analysis, we believe that a court applying the Second Circuit's Augie/Restivo standard would likewise not order the substantive consolidation of QRH with QIH or QPF. Neither prong of the Augie/Restivo test is satisfied, and the equities weigh decisively against consolidation.
VI. Qualifications and Limitations
This opinion is subject to the following qualifications and limitations:
1. Governing Law. This opinion is limited to the laws of the State of New York, the federal laws of the United States (including the Bankruptcy Code), and the Delaware Limited Liability Company Act (6 Del. C. §§ 18-101 et seq.). We express no opinion as to the laws of any other jurisdiction, including the laws of any state other than New York and Delaware, or the laws of any foreign country.
2. Date of Opinion. This opinion is based on the facts existing, and the law in effect, as of the date hereof. We have no obligation to update or supplement this opinion to reflect any changes in facts or law occurring after the date hereof, whether or not such changes would affect the conclusions expressed herein.
3. Assumptions. This opinion is based on the Assumptions set forth in Section IV above. If any Assumption proves to be incorrect, incomplete, or otherwise not satisfied, this opinion may be materially affected, and we express no opinion with respect to the matters addressed herein to the extent any such Assumption is not satisfied.
4. Equitable Discretion. The question of whether a bankruptcy court would order the substantive consolidation of QRH with QIH or QPF is, by its nature, a fact-intensive inquiry within the equitable discretion of the bankruptcy court. No opinion, however carefully rendered, can guarantee the outcome of such a proceeding. Our opinion reflects our professional judgment as to the most likely outcome based on the facts and law as we understand them, but we acknowledge that a court could reach a different conclusion, particularly if the facts or circumstances differ from those assumed herein.
5. True Sale. This opinion does not address, and we express no opinion on, whether the transfers of Receivables from QPF to QRH constitute "true sales" for purposes of federal bankruptcy law or any other law. The true sale characterization is addressed in a separate true sale opinion being prepared by this firm, expected to be dated on or about October 8, 2022.
6. Tax Characterization. This opinion does not address, and we express no opinion on, the tax characterization or treatment of QRH, QRF 2022-1, or any transaction contemplated by the Transaction Documents. The tax characterization of the entities and transactions is addressed in a separate tax opinion prepared by Sylvia Hartwell, Esq.
7. Ongoing Compliance. This opinion assumes ongoing compliance by QRH, QPF, QIH, and their respective officers, managers, agents, and representatives with the separateness covenants and operational requirements set forth in the LLC Agreement and the Transaction Documents. Any failure to observe such covenants — including any commingling of assets, failure to maintain separate books and records, failure to maintain the independent manager, or failure to hold QRH out as a separate entity — could materially alter the analysis set forth herein and could increase the risk that a court would order substantive consolidation.
8. Delaware Counsel. Calderwood & Harkness LLP is a New York law firm and does not hold itself out as experts on matters of Delaware law. We opine on matters of Delaware law only to the extent of the Delaware Limited Liability Company Act as applied to the formation, governance, and operation of QRH. The addressees may wish to obtain a separate opinion from Delaware counsel as to matters of Delaware law, including the enforceability of the separateness covenants, the non-petition covenants, and the independent manager provisions under Delaware law.
9. Reliance. This opinion is rendered solely for the benefit of the addressees named herein and their successors and assigns as holders of the Notes or as Indenture Trustee, and may not be relied upon by any other person or entity without our prior written consent.
10. Bankruptcy Limitations. This opinion is subject to the effect of (a) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent transfer, fraudulent conveyance, preference, and similar laws affecting creditors' rights generally, (b) general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), including concepts of materiality, reasonableness, good faith, and fair dealing, and (c) the exercise by any court of its equitable powers, including the power to deny specific performance or other equitable remedies.
11. No Other Matters. Except as expressly set forth herein, we express no opinion on any other matter, including, without limitation, the validity, enforceability, or binding effect of any Transaction Document, the perfection or priority of any security interest, or the compliance of any party with any applicable law, rule, or regulation.
VII. Draft Status Notice
IMPORTANT NOTICE REGARDING DRAFT STATUS
This opinion is in DRAFT form only, dated October 5, 2022. It has not been finalized and is not intended for reliance in its current form. This draft opinion is circulated solely for discussion purposes among the addressees and their respective counsel and advisors, and no party should take any action in reliance on this draft opinion.
Finalization of this opinion was to occur at or prior to the closing of the offering of the Notes. We anticipated that the finalized opinion would reflect, among other things, (a) the execution and delivery of all Transaction Documents in final form, (b) confirmation of the filing of all UCC-1 financing statements, (c) receipt of all officer's certificates and other closing deliverables, and (d) any updates to the factual background or legal analysis necessitated by changes occurring between the date of this draft and the closing date.
We note for the record that the Transaction was shelved as of November 14, 2022, and this opinion was never finalized, executed, or delivered. The Transaction Documents reviewed by us were never executed in final form, and the Notes were never issued. Accordingly, this draft opinion has no legal force or effect and may not be relied upon by any person for any purpose.
This draft remains subject to further review, revision, and updating, and any final opinion, if issued, may differ in material respects from this draft.
VIII. Opinion
Subject to the foregoing Assumptions, qualifications, and limitations, and based on our review of the Reviewed Documents and the applicable law, it is our opinion that:
If Quorum Insurance Holdings Corp. or Quorum Premium Finance LLC were to become a debtor in a case under Title 11 of the United States Code (the "Bankruptcy Code"), a court exercising proper jurisdiction and applying the applicable legal standards — whether under the framework articulated by the United States Court of Appeals for the Third Circuit in In re Owens Ashgrove Partners LLC, 419 F.3d 195 (3d Cir. 2005), or the framework articulated by the United States Court of Appeals for the Second Circuit in In re Augie/Restivo Baking Co., Ltd., 860 F.2d 515 (2d Cir. 1988) — would not order the substantive consolidation of Quorum Receivables Holding LLC with Quorum Insurance Holdings Corp. or Quorum Premium Finance LLC, provided that Quorum Receivables Holding LLC has at all times observed and continues to observe the separateness covenants and operational requirements set forth in its Limited Liability Company Agreement and the Transaction Documents, including, without limitation, the requirements relating to the maintenance of separate books and records, separate bank accounts, an independent manager, adequate capitalization, and arm's-length relationships with affiliates.
This opinion is limited to the matters expressly stated herein and is not to be read as extending, by implication or otherwise, to any other matter. We assume no obligation to advise any person of any change in fact or law that may come to our attention after the date hereof.
IX. Signature block
DRAFT — NOT FOR EXECUTION
This draft opinion has not been finalized, executed, or delivered. It is circulated for discussion purposes only and may not be relied upon by any person.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Douglas Carmichael
Title: Partner
Prepared by: Yuki Nakamura, Associate Carlos Espinoza, Associate
CALDERWOOD & HARKNESS LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 558-4000
Matter No. 1025-00007
DRAFT — FOR DISCUSSION PURPOSES ONLY — NOT FOR RELIANCE PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law

IMPORTANT NOTICE REGARDING DRAFT STATUS

CALDERWOOD & HARKNESS LLP

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