Court filing

Motion for Joint Administration of Related Chapter 11 Cases — In re KServicing (Bankr. D. Del., 2022-10-03)

Filed October 3, 2022 in Kservicing Bankruptcy; one of 140 filings from this case.

Record facts

Court	U.S. Bankruptcy Court for the District of Delaware
Filed	2022-10-03

U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 3 · 2022-10-03 · Docket on CourtListener

Full text

RLF1 28018166v.1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE, INC.,
:
Case No. 22-10951 ( )

Debtor.

Tax I.D. No. 36-4973937
:
:
:

------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE CANADA HOLDINGS, LLC,
:
Case No. 22-10952 ( )

Debtor.
:

Tax I.D. No. N/A
:

------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE ASSET SECURITIZATION
LLC,
:
:
Case No. 22-10953 ( )
Debtor.
:

Tax I.D. No. N/A
:

------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE ASSET FUNDING 2017-A
:
Case No. 22-10954 ( )
LLC,
:

Debtor.
:

Tax I.D. No. 61-1854803
:

------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE ASSET FUNDING 2019-A
:
Case No. 22-10955 ( )
LLC,
:

Debtor.
:

Tax I.D. No. 83-4698973
:

------------------------------------------------------------ x

Case 22-10951-CTG Doc 3 Filed 10/03/22 Page 1 of 13

RLF1 28018166v.1
------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE DIAMETER, LLC,
:
Case No. 22-10956 ( )

Debtor.
:

Tax I.D. No. N/A
:

------------------------------------------------------------ x

MOTION OF DEBTORS FOR ENTRY OF ORDER
DIRECTING JOINT ADMINISTRATION OF RELATED CHAPTER 11 CASES
Kabbage, Inc. d/b/a KServicing and its debtor affiliates, as debtors and debtors in
possession in the above-captioned chapter 11 cases (collectively, the “Debtors” and, together with
their non-Debtor affiliates, the “Company”), respectfully move and represent as follows in support
of this motion (this “Motion”):
Relief Requested
1.
By this Motion, the Debtors request entry of an order directing
consolidation of their chapter 11 cases for procedural purposes only, pursuant to Rule 1015(b) of
the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and Rule 1015-1 of the
Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the
District of Delaware (the “Local Rules”).
2.
A proposed form of order granting the relief requested herein is annexed
hereto as Exhibit A (the “Proposed Order”).
Jurisdiction and Venue
3.
The Court has jurisdiction to consider this matter pursuant to
28 U.S.C. §§ 157 and 1334, and the Amended Standing Order of Reference from the United States
District Court for the District of Delaware, dated February 29, 2012. This is a core proceeding
pursuant to 28 U.S.C. § 157(b). Pursuant to Rule 9013-1(f) of the Local Rules, the Debtors consent
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RLF1 28018166v.1
to the entry of a final order by the Court in connection with this Motion if it is later determined
that the Court, absent consent of the parties, cannot enter final orders or judgments consistent with
Article III of the United States Constitution. Venue is proper before the Court pursuant to
28 U.S.C. §§ 1408 and 1409.
Background
4.
On the date hereof (the “Petition Date”), the Debtors commenced with the
Court voluntary cases under chapter 11 of title 11 of the United States Code
(the “Bankruptcy Code”). The Debtors are authorized to continue operating their business and
managing their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the
Bankruptcy Code. No trustee, examiner, or statutory committee has been appointed in the Debtors’
voluntary cases (the “Chapter 11 Cases”).
5.
Additional information regarding the Debtors’ business, capital structure,
and the circumstances leading to the commencement of these Chapter 11 Cases is set forth in the
Declaration of Deborah Rieger-Paganis In Support of Debtors’ Chapter 11 Petitions and First
Day Relief (the “First Day Declaration”), filed contemporaneously herewith.1
Relief Requested Should Be Granted
6.
Bankruptcy Rule 1015(b) provides, in relevant part, that “[i]f . . . two or
more petitions are pending in the same court by or against . . . a debtor and an affiliate, the court
may order a joint administration of the estates.” Fed. R. Bankr. P. 1015(b). Under section 101(2)
of the Bankruptcy Code, the term “affiliate” means:
(A) [an] entity that directly or indirectly owns, controls, or holds
with power to vote, 20 percent or more of the outstanding voting

1 Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the First Day
Declaration.
Case 22-10951-CTG Doc 3 Filed 10/03/22 Page 3 of 13

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securities of the debtor, other than an entity that holds such
securities—
(i) in a fiduciary or agency capacity without sole
discretionary power to vote such securities; or
(ii) solely to secure a debt, if such entity has not in
fact exercised such power to vote;
(B) [a] corporation 20 percent or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held with
power to vote, by the debtor, or by an entity that directly or
indirectly owns, controls, or holds with power to vote, 20 percent
or more of the outstanding voting securities of the debtor, other than
an entity that holds such securities—
(i) in a fiduciary or agency capacity without sole
discretionary power to vote such securities; or
(ii) solely to secure a debt, if such entity has not in fact
exercised such power to vote . . . .
11 U.S.C. § 101(2). The Debtors are all “affiliates” as that term is defined in section 101(2) of the
Bankruptcy Code. As set forth in the First Day Declaration, the Debtors are under common
ownership and control by an entity with, directly or indirectly, at least 20% of the outstanding
voting securities in each Debtor. Accordingly, this Court is authorized to jointly administer these
Chapter 11 Cases for procedural purposes.
7.
In addition, Local Rule 1015–1 provides, in relevant part, as follows:
An order of joint administration may be entered, without notice and
an opportunity for hearing, upon the filing of a motion for joint
administration . . . supported by an affidavit, declaration or
verification, which establishes that the joint administration of two or
more cases pending in this Court under title 11 is warranted and will
ease the administrative burden for the Court and the parties.
Pursuant to Local Rule 1015-1, the Debtors have filed the First Day Declaration
contemporaneously herewith. As set forth in the First Day Declaration, joint administration of the
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RLF1 28018166v.1
Debtors’ respective estates is warranted and will ease the administrative burden for the Court and
all parties in interest.
8.
Joint administration of these Chapter 11 Cases will save the Debtors and
their estates substantial time and expense because it will remove the need to prepare, replicate,
file, and serve duplicative notices, applications, and orders. Further, joint administration will
relieve the Court of entering duplicative orders and maintaining duplicative files and dockets. The
United States Trustee for the District of Delaware (the “U.S. Trustee”) and other parties in interest
will similarly benefit from joint administration of these Chapter 11 Cases, as it will spare them the
time and effort of reviewing duplicative pleadings and papers.
9.
Joint administration of these Chapter 11 Cases will not adversely affect
creditors’ rights because this Motion requests administrative consolidation of the Debtors’ estates
for procedural purposes only and does not seek substantive consolidation. As such, each creditor
will continue to hold its claim against a particular Debtor’s estate after this Motion is approved.
10.
Although the lead Debtor is listed for tax identification purposes as
“Kabbage, Inc.,” the lead Debtor also does business under the trade names “KServicing”
“KServicing, Inc.” and “KService Corp.” Kabbage, Inc. formally and primarily conducts business
under the trade name “KServicing” and has licensed the use of the “Kabbage” trademark as a result
of (a) an Agreement and Plan of Merger, dated August 16, 2020, as between Kabbage, Inc.,
American Express Travel Related Services Company, Inc., and certain others and (b) a related
Transition Services Agreement, dated October 16, 2020, as between Alpha Kabbage, Inc. and
Kabbage, Inc. Accordingly, the proposed case caption for the jointly-administered cases will
reflect the trade name “KServicing” to, among other things, preserve familiarity with the Debtors’
businesses for all interested parties.
Case 22-10951-CTG Doc 3 Filed 10/03/22 Page 5 of 13

RLF1 28018166v.1
11.
The Debtors respectfully request that these cases be administered under the
following caption:
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE, INC. d/b/a KSERVICING, et al., :
Case No. 22-10951 ( )

Debtors. 1
:
(Jointly Administered)
------------------------------------------------------------ x

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification
number, as applicable are: Kabbage, Inc. d/b/a KServicing (3937); Kabbage Canada Holdings, LLC (N/A); Kabbage
Asset Securitization LLC (N/A); Kabbage Asset Funding 2017-A LLC (4803); Kabbage Asset Funding 2019-A LLC
(8973); and Kabbage Diameter, LLC (N/A). Kabbage is a trademark of American Express used under license;
Kabbage, Inc. d/b/a KServicing is not affiliated with American Express. The Debtors’ mailing and service address is
925B Peachtree Street NE, Suite 383, Atlanta, GA 30309.
12.
The Debtors also request that the following notation be entered on the
docket in each Debtor’s chapter 11 case (other than the chapter 11 case of Kabbage, Inc. d/b/a
KServicing) to reflect the joint administration of these cases:
An order has been entered in this case directing the procedural
consolidation and joint administration of the Chapter 11 Cases of
Kabbage, Inc. d/b/a KServicing, et al. The docket in Case No. 22-
10951 ( ) should be consulted for all matters affecting this case.
13.
Based on the foregoing, the relief requested herein is necessary, appropriate,
and in the best interests of the Debtors, their estates, and all other parties in interest in these
Chapter 11 Cases. Accordingly, the Court should authorize the relief requested herein.
Notice
14.
Notice of this Motion will be provided to (a) the Office of the United States
Trustee for the District of Delaware; (b) the holders of the 30 largest unsecured claims against the
Debtors on a consolidated basis; (c) the Federal Reserve Bank; (d) Customers Bank; (e) Cross
Case 22-10951-CTG Doc 3 Filed 10/03/22 Page 6 of 13

RLF1 28018166v.1
River Bank; (f) the United States Department of Justice; (g) the Federal Trade Commission; (h) the
Small Business Administration; (i) the Internal Revenue Service; (j) the Securities and Exchange
Commission; (k) the United States Attorney’s Office for the District of Delaware; and (l) any party
that is entitled to notice pursuant to Local Rule 9013-1(m) (collectively, the “Notice Parties”). As
this Motion is seeking “first-day” relief, the Debtors will serve copies of this Motion and any order
entered in respect of this Motion as required by Local Rule 9013-1(m). The Debtors believe that
no further notice is required.
No Prior Request
15.
No previous request for the relief sought herein has been made by the
Debtors to this or any other court.

[Remainder of page intentionally left blank]

Case 22-10951-CTG Doc 3 Filed 10/03/22 Page 7 of 13

RLF1 28018166v.1
WHEREFORE the Debtors respectfully request entry of the Proposed Order
granting the relief requested herein and such other and further relief as the Court may deem just
and appropriate.
Dated: October 3, 2022

Wilmington, Delaware

/s/ Zachary I. Shapiro
RICHARDS, LAYTON & FINGER, P.A.
Daniel J. DeFranceschi (No. 2732)
Amanda R. Steele (No. 5530)
Zachary I. Shapiro (No. 5103)
Matthew P. Milana (No. 6681)
One Rodney Square
920 North King Street
Wilmington, Delaware 19801
Telephone: (302) 651-7700
E-mail: defranceschi@rlf.com
steele@rlf.com
shapiro@rlf.com
milana@rlf.com

-and-

WEIL, GOTSHAL & MANGES LLP
Ray C. Schrock, P.C. (pro hac vice admission pending)
Candace M. Arthur (pro hac vice admission pending)
Natasha S. Hwangpo (pro hac vice admission pending)
Chase A. Bentley (pro hac vice admission pending)
767 Fifth Avenue
New York, New York 10153
Telephone:
(212) 310-8000
E-mail:
ray.schrock@weil.com
candace.arthur@weil.com

natasha.hwangpo@weil.com
chase.bentley@weil.com

Proposed Attorneys for Debtors
and Debtors in Possession

Case 22-10951-CTG Doc 3 Filed 10/03/22 Page 8 of 13

RLF1 28018166v.1
Exhibit A
Proposed Order

Case 22-10951-CTG Doc 3 Filed 10/03/22 Page 9 of 13

RLF1 28018166v.1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE, INC.,
:
Case No. 22-10951 ( )

Debtor.

Tax I.D. No. 36-4973937
:
:
:

------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE CANADA HOLDINGS, LLC,
:
Case No. 22-10952 ( )

Debtor.
:

Tax I.D. No. N/A
:

------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE ASSET SECURITIZATION
LLC,
:
:
Case No. 22-10953 ( )
Debtor.
:

Tax I.D. No. N/A
:

------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE ASSET FUNDING 2017-A
:
Case No. 22-10954 ( )
LLC,
:

Debtor.
:

Tax I.D. No. 61-1854803
:

------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE ASSET FUNDING 2019-A
:
Case No. 22-10955 ( )
LLC,
:

Debtor.
:

Tax I.D. No. 83-4698973
:

------------------------------------------------------------ x

Case 22-10951-CTG Doc 3 Filed 10/03/22 Page 10 of 13

RLF1 28018166v.1
------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE DIAMETER, LLC,
:
Case No. 22-10956 ( )

Debtor.
:

Tax I.D. No. N/A
:

------------------------------------------------------------ x

ORDER PURSUANT TO FED. R. BANKR. P. 1015(b)
DIRECTING JOINT ADMINISTRATION OF RELATED CHAPTER 11 CASES
Upon the motion, dated October 3, 2022 (the “Motion”)1 of Kabbage, Inc. d/b/a
KServicing and its debtor affiliates, as debtors and debtors in possession in the Chapter 11 Cases
(collectively, the “Debtors”), for entry of an order pursuant to Bankruptcy Rule 1015(b) and Local
Rule 1015-1 directing joint administration of the Chapter 11 Cases, all as more fully set forth in
the Motion; and this Court having jurisdiction to consider the Motion and the relief requested
therein pursuant to 28 U.S.C. §§ 157(a)–(b) and 1334(b), and the Amended Standing Order of
Reference from the United States District Court for the District of Delaware, dated February 29,
2012; and consideration of the Motion and the requested relief being a core proceeding pursuant
to 28 U.S.C. § 157(b); and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408
and 1409; and due and proper notice of the Motion having been provided; and such notice having
been adequate and appropriate under the circumstances, and it appearing that no other or further
notice need be provided; and this Court having reviewed the Motion; and upon any hearing held
on the Motion (the “Hearing”); and upon the First Day Declaration and the record of the Hearing;
and this Court having determined that the legal and factual bases set forth in the Motion establish
just cause for the relief granted herein; and it appearing that the relief requested in the Motion is

1 Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms
in the Motion.
Case 22-10951-CTG Doc 3 Filed 10/03/22 Page 11 of 13

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in the best interests of the Debtors and their respective estates and creditors; and after due
deliberation and sufficient cause appearing therefor,
IT IS HEREBY ORDERED THAT
1.
The Motion is granted to the extent set forth herein.
2.
The above-captioned chapter 11 cases are consolidated for procedural
purposes only and shall be jointly administered by the Court under Case No. 22-10951 (___).
3.
Nothing contained in this Order shall be deemed or construed as directing
or otherwise affecting the substantive consolidation of any of the above-captioned cases, the
Debtors, or the Debtors’ estates.
4.
The caption of the jointly administered cases should read as follows:
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
------------------------------------------------------------ x

In re
:
Chapter 11

KABBAGE, INC. d/b/a KSERVICING, et al., :
Case No. 22-10951 ( )

Debtors. 1
:
(Jointly Administered)
------------------------------------------------------------ x

RLF1 28018166v.1
6.
The Debtors are authorized to take all action necessary to effectuate the
relief granted in this Order.
7.
This Court shall retain jurisdiction to hear and determine all matters arising
from or related to the implementation, interpretation, or enforcement of this Order.

Case 22-10951-CTG Doc 3 Filed 10/03/22 Page 13 of 13

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Motion for Joint Administration of Related Chapter 11 Cases — In re KServicing (Bankr. D. Del., 2022-10-03)

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