Motion to Pay Certain Prepetition Taxes and Assessments — In re KServicing (Bankr. D. Del.)

Record facts

U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 9 · 2022-10-03 · Docket on CourtListener

Full text

RLF1 28018229v.1 
UNITED STATES BANKRUPTCY COURT 
FOR THE DISTRICT OF DELAWARE 
------------------------------------------------------------ x 
 
In re 
: 
Chapter 11 
 
: 
 
KABBAGE, INC. d/b/a KSERVICING, et al,  : 
Case No. 22-10951 (       ) 
 
: 
 
 
 
Debtors.1  
: 
(Joint Administration Requested) 
------------------------------------------------------------ x 
 
 
 
 
MOTION OF DEBTORS FOR ENTRY OF INTERIM AND FINAL ORDERS 
(I) AUTHORIZING DEBTORS (A) TO PAY CERTAIN PREPETITION 
TAXES AND ASSESSMENTS AND (B) GRANTING RELATED RELIEF 
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”):2 
Relief Requested 
1. 
By this Motion, the Debtors request, pursuant to sections 105(a), 363(b), 
507(a), and 541(d) of title 11 of the United States Code (the “Bankruptcy Code”) and Rules 6003 
and 6004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), that the Court 
(i) authorize the Debtors to pay certain prepetition Taxes and Assessments (as defined herein) due 
and owing to various local, state, and federal taxing and other governmental authorities 
                                                 
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. 
2 The facts and circumstances supporting the relief requested herein are set forth in the First Day Declaration (as 
defined below) filed contemporaneously herewith.  Capitalized terms used but not defined herein shall have the 
respective meanings ascribed to such terms in the First Day Declaration (as defined below). 
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(collectively, the “Taxing Authorities”) that arose prior to the Petition Date and (ii) grant related 
relief. 
2. 
The Debtors further request that the Court (a) authorize all applicable 
financial institutions (collectively, the “Banks”) to receive, process, honor, and pay all checks 
presented for payment and electronic payment requests relating to the foregoing to the extent 
directed by the Debtors in accordance with this Motion, and to the extent the Debtors have 
sufficient funds on deposit in their accounts with such Bank, whether such checks were presented 
or electronic requests were submitted before or after the date hereof, and (b) authorize all Banks 
to rely on the Debtors’ designation of any particular check or electronic payment request as 
appropriate pursuant to this Motion without any duty of further inquiry and without liability for 
following the Debtors’ instructions. 
3. 
A proposed form of order granting the relief requested herein on an interim 
basis is annexed hereto as Exhibit A (the “Proposed Interim Order”), and a proposed form of 
order granting the relief requested herein on a final basis is annexed hereto as Exhibit B 
(the “Proposed Final Order”, and together with the Proposed Interim Order, the “Proposed 
Orders”). 
Jurisdiction and Venue 
4. 
The Court has jurisdiction to consider this matter pursuant to 
28 U.S.C. §§ 157 and 1334, and the Amended Standing Order of Reference entered by 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 of 
Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of 
Delaware (the “Local Rules”), the Debtors consent 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, 
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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 
5. 
On the date hereof (the “Petition Date”), the Debtors commenced with the 
Court voluntary cases under chapter 11 of title 11 of the Bankruptcy Code (the “Chapter 11 
Cases”).  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 these Chapter 11 Cases. 
6. 
Contemporaneously herewith, the Debtors have filed a motion requesting 
joint administration of their Chapter 11 Cases pursuant to Rule 1015(b) of the Bankruptcy Rules 
and Rule 1015-1 of the Local Rules. 
7. 
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. 
Debtors’ Prepetition Taxes and Assessments 
8. 
In the ordinary course of business, the Debtors are obligated to pay certain 
taxes and assessments, which generally fall into the following categories, each of which is 
discussed in more detail below: (i) franchise taxes, (ii) personal property taxes, (iii) income taxes, 
and (iv) other fees (collectively, the “Taxes and Assessments”).   
9. 
In the 12 months prior to the Petition Date, the Debtors paid approximately 
$2,115,000 in the aggregate, in Taxes and Assessments, which are paid on a quarterly or annual 
basis, in each case as required by applicable law and regulation.  The Debtors estimate that 
approximately $321,500 in the aggregate of Taxes and Assessments relating to the prepetition 
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period will become due and payable after the Petition Date, with approximately $67,000 coming 
due within the 30 days following the Petition Date.  The following table provides an overview of 
the estimated prepetition amounts that the Debtors seek relief to pay (or use tax credits to offset):   
Category 
Estimated Prepetition 
Amount 
Estimated Prepetition 
Amount Coming Due in 
First 30 Days 
Franchise Taxes 
$93,500 
$0 
Personal Property 
Taxes 
$38,500 
$0 
Income Taxes 
$184,000 
$67,000 
Other Fees 
$5,500 
$0 
TOTAL 
$321,500 
$67,000 
 
A. 
Franchise Taxes 
10. 
In the ordinary course of business, the Debtors are required to pay state 
franchise taxes in the jurisdiction in which they operate, as well as the jurisdiction in which the 
Debtors were formed or incorporated, as applicable (the “Franchise Taxes”).  The Franchise 
Taxes are typically assessed by Taxing Authorities against the Debtors in connection with 
operating their business within a particular jurisdiction.  As limited liability companies and 
incorporated companies organized under the laws of the State of Delaware, the Debtors are 
required to pay Franchise Taxes to continue operating as Delaware entities.  Franchise Taxes are 
remitted by the Debtors on an annual basis to the relevant Taxing Authorities.   
11. 
During the 12-month period prior to the Petition Date, the Debtors paid 
approximately $375,000 in state Franchise Taxes.  The Debtors estimate that they owe $93,500 in 
remaining prepetition Franchise Taxes to the Taxing Authorities, none of which will become due 
and payable during the first 30 days following the Petition Date.  
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B. 
Personal Property Taxes 
12. 
The Debtors are required to pay ad valorem taxes on owned personal 
property in the jurisdiction in which they operate (collectively, the “Personal Property Taxes”).  
Personal Property Tax returns are typically filed with state or local assessing authorities at the 
beginning of the year.  At that time, a value is determined upon which the Personal Property Taxes 
will be based for the taxes owed at the end of that year, after which the Debtors timely remit their 
Personal Property Tax payments to the relevant Taxing Authorities by the tax due date.   
13. 
During the 12 month period prior to the Petition Date, the Debtors paid 
approximately $0.00 in Personal Property Taxes for taxes assessed in the 2021 calendar year.  The 
Debtors estimate that they owe $38,500 in remaining prepetition Personal Property Taxes to the 
Taxing Authorities relating to the 2021 taxable year, none of which will become due and payable 
during the first 30 days following the Petition Date.3 The Debtors estimate that they will have 
minimal liability on account of Personal Property Taxes relating to the 2022 and 2023 calendar 
years and do not believe any such amounts will become due and payable during the 30 days 
following the Petition Date.   
C. 
Income Taxes 
14. 
The Debtors also incur certain federal and state income taxes (collectively, 
the “Income Taxes”) that are payable to various Taxing Authorities.  Income Taxes vary 
throughout the year in terms of timing and amounts.  For 2021, the Debtors’ Income Tax returns 
                                                 
3  Certain Taxing Authorities have filed liens in the amount of $31,000 against 730 Peachtree Street NE, Suite 350, 
Atlanta, GA 30308 for unpaid 2021 Personal Property Taxes relating to office equipment.  The Debtors dispute that 
they owe these Personal Property Taxes because the office equipment was transferred to AmEx in 2020 as part of 
the sale transaction, pursuant to the Agreement and Plan of Merger, dated August 16, 2020. The AmEx transaction 
is further described in the First Day Declaration. Upon filing their 2021 tax returns, the Debtors will be able to show 
that following the AmEx Transaction, the Debtors downsized their workspace and transferred the previous lease 
with the office equipment to AmEx pursuant to the Agreement and Plan of Merger. The Debtors believe the liens 
will be extinguished because such liens were based on tax liability owed solely on account of the previous lease as 
it existed prior to the AmEx Transaction.  
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were due April 15, 2022, however, the Debtors received an extension of this deadline through 
October 15, 2022.  The Debtors intend to file their 2021 Income Tax returns by the October 15, 
2022 deadline  
15. 
During the 12 month period prior to the Petition Date, the Debtors paid 
approximately $1,740,000 in Income Taxes.  As of the Petition Date, the Debtors estimate that 
they owe approximately $183,000 in Income Taxes and $1,000 in penalties and interest, of which 
the Debtors estimate $67,000 will become due and owing during the first 30 days following the 
Petition Date.  
D. 
Other Fees 
16. 
State and local laws require the Debtors to obtain and pay fees (collectively, 
“Fees”) for a wide range of business licenses and permits from a number of local, state, and federal 
authorities.  The method for calculating Fees and the deadlines for paying such amounts vary by 
jurisdiction.  Certain states require the Debtors to pay annual reporting Fees to state governmental 
authorities to remain in good standing for purposes of conducting business within the state.  The 
Debtors estimate that, as of the Petition Date, they owe approximately $5,500 in prepetition Fees. 
Additionally, the Debtors estimate that approximately $0.00 of such Fees will become due and 
payable within the first 30 days following the Petition Date.  
Relief Requested Should be Granted 
A. 
Payment of Prepetition Taxes and Assessments is Warranted Under Section 
363(b)(1) and 105(a) of the Bankruptcy Code and Doctrine of Necessity 
17. 
A bankruptcy court may authorize a debtor to pay certain prepetition 
obligations pursuant to section 363(b) of the Bankruptcy Code. 11 U.S.C. § 363(b)(1).  Section 
363(b) provides, in pertinent part, that “[t]he trustee, after notice and a hearing, may use, sell, or 
lease, other than in the ordinary course of business, property of the estate.”  To approve the use of 
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assets outside the ordinary course of business pursuant to section 363(b) of the Bankruptcy Code, 
courts require only that the debtor “show that a sound business purpose justifies such actions.”  In 
re Montgomery Ward Holding Corp., 242 B.R. 147, 153 (D. Del. 1999) (internal citations omitted); 
see also In re Phoenix Steel Corp., 82 B.R. 334, 335–36 (Bankr. D. Del. 1987).  
18. 
In addition, the Court has the authority, pursuant to its equitable powers 
under section 105(a) of the Bankruptcy Code, to authorize the relief requested herein because such 
relief is necessary for the Debtors to carry out their fiduciary duties under section 1107(a) of the 
Bankruptcy Code.  Section 105(a) of the Bankruptcy Code empowers bankruptcy courts to “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).  Section 1107(a) of the Bankruptcy Code “contains an implied duty of 
the debtor-in-possession” to “protect and preserve the estate, including an operating business’ 
going-concern value,” on behalf of a debtor’s creditors and other parties in interest.  In re CEI 
Roofing, Inc., 315 B.R. 50, 59 (Bankr. N.D. Tex. 2004) (citations omitted); see also Unofficial 
Comm. of Equity Holders v. McManigle (In re Penick Pharm., Inc.), 227 B.R. 229, 232–33 (Bankr. 
S.D.N.Y. 1998) (“[U]pon filing its petition, the Debtor became debtor in possession and, through 
its management . . . was burdened with the duties and responsibilities of a bankruptcy trustee.”). 
19. 
Furthermore, in a long line of well-established decisions, courts consistently 
have permitted payment of prepetition obligations that are necessary to preserve or enhance the 
value of a debtor’s estate.  See, e.g., In re Lehigh & New Eng. Ry. Co., 657 F.2d 570, 581 (3d Cir. 
1981) (holding that “if payment of a claim which arose prior to reorganization is essential to the 
continued operation of the . . . [business] during reorganization, payment may be authorized even 
if it is made out of [the] corpus”); Dudley v. Mealey, 147 F.2d 268, 271 (2d Cir. 1945) (extending 
doctrine for payment of prepetition claims beyond railroad reorganization cases), cert. denied 325 
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U.S. 873 (1945); Mich. Bureau of Workers’ Disability Comp. v. Chateaugay Corp. (In re 
Chateaugay Corp.), 80 B.R. 279, 285–86 (S.D.N.Y. 1987) (approving lower court order 
authorizing payment of prepetition wages, salaries, expenses, and benefits). 
20. 
In addition, the Court may rely on its equitable powers under section 105(a) 
of the Bankruptcy Code and the doctrine of necessity to authorize the payment of prepetition 
claims when such payment is essential to the continued operation of a debtor’s business.  See, e.g., 
Just for Feet, 242 B.R. 821, 824–25 (D. Del. 1999) (holding that section 105(a) of Bankruptcy 
Code provides a statutory basis for payment of prepetition claims under the doctrine of necessity 
particularly when such payment is necessary for the debtor’s survival during chapter 11); In re 
Columbia Gas Sys., Inc., 171 B.R. 189, 191–92 (Bankr. D. Del. 1994) (confirming that the doctrine 
of necessity is standard for enabling a court to authorize payment of prepetition claims before 
confirming a plan). 
21. 
Payment of the prepetition Taxes and Assessments is an exercise of sound 
business judgment and is necessary to ensure a smooth transition into chapter 11.  The Debtors 
seek to pay the prepetition Taxes and Assessments to, among other reasons, prevent the Taxing 
Authorities from taking actions that would interfere with the Debtors’ continued business 
operations and potentially impose significant costs on the Debtors’ estates.  Such actions may 
include asserting liens on estate assets or seeking to lift the automatic stay.  Additionally, failure 
to satisfy the prepetition Taxes and Assessments may jeopardize the Debtors’ maintenance of good 
standing to operate in the jurisdiction in which they do business.    
22. 
Further, to the extent any prepetition Taxes and Assessments remain unpaid 
by the Debtors, the Debtors’ officers, directors, and managers may be subject to lawsuits or 
criminal prosecution during the pendency of these Chapter 11 Cases.  The dedicated and active 
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participation of the Debtors’ officers, directors and managers, and other employees is not only 
integral to the Debtors’ continued, uninterrupted operations, but essential to the orderly 
administration of these Chapter 11 Cases.  The threat of a lawsuit or criminal prosecution, and any 
ensuing liability, would distract the Debtors and their personnel from important tasks, to the 
detriment of all parties in interest.   
23. 
The relief requested by this Motion represents a sound exercise of the 
Debtors’ business judgment, is necessary to avoid immediate and irreparable harm to the Debtors’ 
estates, and is justified under sections 363(b) and 105(a) of the Bankruptcy Code.  Authorizing the 
Debtors to pay prepetition amounts related to Taxes and Assessments is in the best interests of the 
Debtors, their estates, and their economic stakeholders.  
B. 
Failure to Pay Prepetition Taxes and Assessments May Increase Scope of 
Secured and Priority Claims Held by Taxing Authorities 
24. 
Payment of prepetition Taxes and Assessments is also warranted here 
because the Debtors’ nonpayment may increase the amount of secured claims held by Taxing 
Authorities against the Debtors’ estates.  Specifically, Taxing Authorities may assert liens against 
any property for which the Taxes and Assessments are due and owing.  Arguably, the relation back 
of a tax lien to the assessment or tax status date generally does not affect the enforceability of the 
tax lien against a debtor or violate the automatic stay imposed by section 362(a) of the Bankruptcy 
Code.  See 11 U.S.C. § 362(b)(3).   
25. 
In fact, the creation and perfection of certain tax liens may not violate the 
automatic stay even if the lien arises under applicable law for taxes due after the Petition Date.  
See 11 U.S.C. § 362(b)(18) (automatic stay does not apply to “the creation or perfection of a 
statutory lien for an ad valorem property tax, or a special tax or special assessment on real property 
whether or not ad valorem, imposed by a governmental unit, if such tax or assessment comes due 
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after the date of the filing of the petition[.]”); see also In re Gifaldi, 207 B.R. 54, 56 n.1 (Bankr. 
W.D.N.Y. 1997) (noting that section 362(b)(18) of the Bankruptcy Code reversed case law that 
had held that the creation of a statutory lien against ad valorem property taxes violated the 
automatic stay). 
26. 
Furthermore, to the extent the Taxing Authorities hold oversecured claims, 
if the prepetition Taxes and Assessments are not paid, post-petition interest, fees, penalties, and 
other charges may accrue.  See 11 U.S.C. § 506(b); United States v. Ron Pair Enters., Inc., 489 
U.S. 235, 241-43 (1989) (holding that nonconsensual lienholders may receive interest on their 
claims under section 506(b) of the Bankruptcy Code).  Even if such Taxes and Assessments are 
not treated as secured claims, they may still, as discussed below, be entitled to priority treatment 
— as may any penalties assessed by the applicable Taxing Authorities on delinquent taxes owed 
by the Debtors.  See 11 U.S.C. § 507(a)(8).  The Debtors’ failure to pay the prepetition Taxes and 
Assessments thus may increase the amount of priority claims held by the Taxing Authorities 
against the Debtors’ estates. 
27. 
Paying the prepetition Taxes and Assessments now will avoid the potential 
imposition of liens and the accrual of interest charges and unnecessary fees and penalties on such 
claims, thereby preserving the value of the Debtors’ estates and maximizing the distribution 
available for other creditors.   
C. 
Payment of Prepetition Taxes and Assessments Will Affect Only Timing of 
Payments 
28. 
Most of the Taxes and Assessments described herein may be afforded 
priority status pursuant to section 507(a)(8) of the Bankruptcy Code.  See 11 U.S.C. § 507(a)(8)(A) 
(“[A] tax on or measured by income or gross receipts for a taxable year ending on or before the 
date of the filing of the petition . . . .”); id. at (B) (“[A] property tax incurred before the 
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commencement of the case and last payable without penalty after one year before the date of the 
filing of the petition.”); id. at (C) (“[A] tax required to be collected or withheld and for which the 
debtor is liable in whatever capacity.”); id. at (E) (“[An] excise tax on . . . a transaction occurring 
before the date of the filing of the petition . . . .”); id. at (G) (“[A] penalty related to a claim of a 
kind specified in this paragraph and in compensation for actual pecuniary loss.”).  Thus, payment 
of such Taxes and Assessments would give the Taxing Authorities no more than that to which they 
otherwise would be entitled to under a chapter 11 plan, which will save the Debtors the potential 
interest expense, legal expense, and penalties that otherwise might accrue on, or be incurred in 
connection with, such Taxes and Assessments.    
29. 
Courts frequently authorize early payment of priority claims when such 
early payment is intended to prevent some harm or to procure some benefit for the estate.  See, 
e.g., In re CEI Roofing, Inc., 315 B.R. at 60-61 (finding that authorization of early payment of 
priority claims does not trigger concerns of either upsetting priority scheme of the Bankruptcy 
Code or of unfair discrimination); In re CoServ, L.L.C., 273 B.R. at 493 (implying that the 
bankruptcy court may authorize early payment of prepetition priority claims in instances where 
nonpayment could impair the debtor’s ability to operate); In re Equalnet Commc’ns Corp., 258 
B.R. 368, 370 (Bankr. S.D. Tex. 2000) (stating that the court may authorize pre-plan payment of 
priority claims, including certain tax claims, because “the need to pay these claims in an ordinary 
course of business time frame is simple common sense”). 
30. 
To the extent the prepetition Taxes and Assessments are priority claims, 
they must be paid in full before any general unsecured obligations of the Debtors may be satisfied.  
Accordingly, the proposed relief will affect only the timing of payment of the prepetition Taxes 
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and Assessments, and will not prejudice the rights of any general unsecured creditor or other party 
in interest.   
31. 
For the foregoing reasons, payment of the prepetition Taxes and 
Assessments 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. 
D. 
Cause Exists to Authorize Debtors’ Financial Institutions to Honor Checks and 
Electronic Fund Transfers 
32. 
The Debtors anticipate having sufficient funds to pay the amounts described 
herein in the ordinary course of business using expected cash flows from ongoing business 
operations.  In addition, under the Debtors’ existing cash management system, the Debtors can 
readily identify whether checks or wire transfer requests are payments authorized by the relief 
requested in this Motion.  Accordingly, the Debtors believe that checks or wire transfer requests, 
other than those relating to authorized payments, will not be honored inadvertently and that the 
Court should authorize the Banks, when requested by the Debtors, to receive, process, honor and 
pay any and all checks or wire transfer requests in respect of the relief requested herein, to the 
extent the Debtors have sufficient funds on deposit in their accounts with such Banks, and such 
Banks may rely on the representations of the Debtors without any duty of further inquiry and 
without liability for following the Debtors’ instructions. 
Reservation of Rights 
33. 
Nothing contained herein is intended or shall be construed as (a) an 
admission as to the validity of any claim against the Debtors; (b) a waiver of the Debtors’ or any 
appropriate party in interest’s rights to dispute the amount of, basis for, or validity of any claim 
against the Debtors; (c) a waiver of any claim or cause of action which may exist against any 
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creditor or interest holder; or (d) an approval, assumption, adoption, or rejection of any agreement, 
contract, lease, program, or policy between the Debtors and any third party under section 365 of 
the Bankruptcy Code. Likewise, if the Court grants the relief sought herein, any payment made 
pursuant to the Court’s order is not intended to be and should not be construed as an admission to 
the validity of any claim or a waiver of the Debtors’ rights to dispute such claim subsequently. 
Debtors Have Satisfied Bankruptcy Rule 6003(b) 
34. 
Bankruptcy Rule 6003(b) provides that, to the extent relief is necessary to 
avoid immediate and irreparable harm, a Bankruptcy Court may issue an order granting “a motion 
to use, sell, lease, or otherwise incur an obligation regarding property of the estate, including a 
motion to pay all or part of a claim that arose before the filing of the petition” before 30 days after 
filing of the petition.  Fed. R. Bankr. P. 6003(b).  As described above, and in the First Day 
Declaration, payment of prepetition amounts related to Taxes and Assessments is necessary, 
appropriate, and in the best interest of the Debtors.  Accordingly, the Debtors believe that the relief 
requested herein is necessary to avoid immediate and irreparable harm, and, therefore, Bankruptcy 
Rule 6003 is satisfied.  
Bankruptcy Rule 6004(a) and (h) 
35. 
To implement the foregoing successfully, the Debtors request that the Court 
find that notice of this Motion is adequate under Bankruptcy Rule 6004(a) under the circumstances, 
and waive the 14-day stay of an order authorizing the use, sale, or lease of property under 
Bankruptcy Rule 6004(h).  As described above, and in the First Day Declaration, the relief 
requested herein is necessary to avoid immediate and irreparable harm to the Debtors.  
Accordingly, ample cause exists to justify finding that the notice requirements under Bankruptcy 
Rule 6004(a) have been satisfied and to grant a waiver of the 14-day stay imposed by Bankruptcy 
Rule 6004(h), to the extent such notice requirements and such stay apply. 
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Notice 
36. 
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; (d) Customers Bank; (e) Cross 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; (l) the Banks; 
(m) Alabama Department of Revenue; (n) California Franchise Tax Board; (o) Delaware 
Department of Revenue; (p) Georgia Department of Revenue; (q) North Carolina Department of 
Revenue; (r) New York State Department of Finance; (s) New York City Department of Finance; 
(t) Pennsylvania Department of Revenue; and (u) 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 
37. 
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] 
 
 
 
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WHEREFORE the Debtors respectfully request entry of the Proposed Orders 
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 
 
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 
 
 
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RLF1 28018229v.1 
Exhibit A 
Proposed Interim Order
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RLF1 28018229V.1 
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 
 
 
INTERIM ORDER (I) AUTHORIZING DEBTORS  
(A) TO PAY CERTAIN PREPETITION TAXES AND  
ASSESSMENTS AND (B) GRANTING RELATED RELIEF 
 
Upon the motion (the “Motion”),2 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 (i) authorizing the Debtors to (a) pay certain prepetition Taxes 
and Assessments and (b) granting related relief, 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 entered by 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 
                                                 
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. 
2 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 9    Filed 10/03/22    Page 17 of 24

 
2 
 
RLF1 28018229v.1 
provided; and this Court having held a hearing to consider the interim relief requested in 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 
necessary to avoid immediate and irreparable harm to the Debtors and their estates as contemplated 
by Rule 6003 of the Federal Rules of Bankruptcy Procedure, and after due deliberation and 
sufficient cause appearing therefor, 
IT IS HEREBY ORDERED THAT   
1. 
The Motion is granted on an interim basis to the extent set forth herein. 
2. 
The Debtors are authorized, but not directed, pursuant to sections 105(a), 
363(b), 507(a), and 541(d) of the Bankruptcy Code, to satisfy all Taxes and Assessments due and 
owing, in the ordinary course of business as such obligations become due, to the Taxing 
Authorities that arose prior to the Petition Date, including all Taxes and Assessments subsequently 
determined by audit or otherwise to be owed for periods prior to the Petition Date, in an aggregate 
amount not to exceed $67,000, absent further order of this Court.  Such Taxes and Assessments 
are summarized in further detail in the chart below.  
Category 
Interim 
Franchise Taxes 
$0 
Personal Property 
Taxes 
$0 
Income Taxes 
$67,000 
Other Fees 
$0 
TOTAL 
$67,000 
 
Case 22-10951-CTG    Doc 9    Filed 10/03/22    Page 18 of 24

 
3 
 
RLF1 28018229v.1 
3. 
Each of the Banks at which the Debtors maintain their accounts relating to 
the payment of the prepetition Taxes and Assessments are authorized to (a) receive, process, honor, 
and pay all checks presented for payment, and to honor all fund transfer requests made by the 
Debtors thereto, to the extent that sufficient funds are on deposit in those accounts and (b) accept 
and rely on all representations made by the Debtors with respect to which checks, drafts, wires, or 
automated clearing house transfers should be honored or dishonored in accordance with this or 
any other order of this Court, whether such checks, drafts, wires, or transfers are dated before, on, 
or after the Petition Date, without any duty to inquire otherwise. 
4. 
The Debtors are authorized, but not directed, to issue new post-petition 
checks, or effect new electronic funds transfers, on account of payment of the prepetition Taxes 
and Assessments as set forth herein, and to replace any prepetition checks or electronic fund 
transfer requests that may be lost or dishonored or rejected as a result of the commencement of the 
Debtors’ Chapter 11 Cases.  
5. 
Notwithstanding entry of this Interim Order, nothing herein shall create, nor 
is intended to create, any rights in favor of or enhance the status of any claim held by any party. 
6. 
The requirements of Bankruptcy Rule 6003(b) have been satisfied. 
7. 
Under the circumstances of these Chapter 11 Cases, notice of the Motion is 
adequate under Bankruptcy Rule 6004(a). 
8. 
Notwithstanding the provisions of Bankruptcy Rule 6004(h), this Interim 
Order shall be immediately effective and enforceable upon its entry.   
9. 
The Debtors are authorized to take all action necessary to effectuate the 
relief granted in this Interim Order. 
Case 22-10951-CTG    Doc 9    Filed 10/03/22    Page 19 of 24

 
4 
 
RLF1 28018229v.1 
10. 
This Court shall retain jurisdiction to hear and determine all matters arising 
from or related to the implementation, interpretation, or enforcement of this Interim Order. 
11. 
The final hearing to consider the relief requested in the Motion shall be 
held on   
, 2022 at ______ (Prevailing Eastern Time), and any objections or responses to 
the Motion shall be in writing, filed with the Court, and served on or prior to ____________, 
2022 at 4:00 p.m. (Prevailing Eastern Time).
Case 22-10951-CTG    Doc 9    Filed 10/03/22    Page 20 of 24

 
 
RLF1 28018229v.1 
Exhibit B 
Proposed Final Order 
Case 22-10951-CTG    Doc 9    Filed 10/03/22    Page 21 of 24

 
 
RLF1 28018229v.1 
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 
 
 
FINAL ORDER (I) AUTHORIZING DEBTORS  
(A) TO PAY CERTAIN PREPETITION TAXES 
AND ASSESSMENTS AND (B) GRANTING RELATED RELIEF 
Upon the motion (the “Motion”),2 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 (i) authorizing the Debtors to (a) pay certain prepetition Taxes 
and Assessments and (b) granting related relief, 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 
                                                 
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. 
2 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 9    Filed 10/03/22    Page 22 of 24

 
2 
 
RLF1 28018229v.1 
Court having held hearings to consider the relief requested in the Motion on an interim and, if 
necessary, final basis (the “Hearings”); and upon the First Day Declaration and the record of the 
Hearings, and all of the proceedings had before this Court; 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 after due deliberation and sufficient cause appearing therefor, 
IT IS HEREBY ORDERED THAT   
1. 
The Motion is granted on a final basis to the extent set forth herein. 
2. 
The Debtors are authorized, but not directed pursuant to sections 105(a), 
363(b), 507(a), and 541(d) of the Bankruptcy Code, to satisfy all Taxes and Assessments due and 
owing, in the ordinary course of business as such obligations become due, to the Taxing 
Authorities that arose prior to the Petition Date, including all Taxes and Assessments subsequently 
determined by audit or otherwise to be owed for periods prior to the Petition Date, in the aggregate 
amount not to exceed $321,500, absent further order of this Court.  Such Taxes and Assessments 
are summarized in further detail in the chart below.  
Category 
Final 
Franchise Taxes 
$93,500 
Personal Property 
Taxes 
$38,500 
Income Taxes 
$184,000 
Other Fees 
$5,500 
TOTAL 
$321,500 
 
3. 
Each of the Banks at which the Debtors maintain their accounts relating to 
the payment of the prepetition Taxes and Assessments are authorized to (a) receive, process, honor, 
Case 22-10951-CTG    Doc 9    Filed 10/03/22    Page 23 of 24

 
3 
 
RLF1 28018229v.1 
and pay all checks presented for payment, and to honor all fund transfer requests made by the 
Debtors related thereto, to the extent that sufficient funds are on deposit in those accounts, and 
(b) accept and rely on all representations made by the Debtors with respect to which checks, drafts, 
wires, or automated clearing house transfers should be honored or dishonored in accordance with 
this or any other order of this Court, whether such checks, drafts, wires, or transfers are dated 
before, on, or after the Petition Date, without any duty to inquire otherwise. 
4. 
The Debtors are authorized, but not directed, to issue new post-petition 
checks, or effect new electronic funds transfers, on account of payment of the prepetition Taxes 
and Assessments as set forth herein, and to replace any prepetition checks or electronic fund 
transfer requests that may be lost, dishonored, or rejected as a result of the commencement of the 
Debtors’ Chapter 11 Cases.  
5. 
Notwithstanding entry of this Final Order, nothing herein shall create, nor 
is intended to create, any rights in favor of or enhance the status of any claim held by, any party. 
6. 
Notice of the Motion is adequate under Bankruptcy Rule 6004(a). 
7. 
Notwithstanding Bankruptcy Rule 6004(h), this Final Order shall be 
immediately effective and enforceable upon its entry. 
8. 
The Debtors are authorized to take all action necessary to effectuate the 
relief granted in this Final Order. 
9. 
This Court shall retain jurisdiction to hear and determine all matters 
arising from or related to the implementation, interpretation, or enforcement of this Final Order. 
 
 
Case 22-10951-CTG    Doc 9    Filed 10/03/22    Page 24 of 24

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