Retention Application — Richards, Layton & Finger, P.A. as Co-Counsel — In re KServicing

Record facts

U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 46 · 2022-10-04 · Docket on CourtListener

Summary

The debtors' application to retain and employ Richards, Layton & Finger, P.A. as co-counsel effective as of the petition date, filed October 4, 2022 as Doc 46 in the jointly administered Chapter 11 cases of Kabbage, Inc. d/b/a KServicing, et al., Case No. 22-10951 (CTG), in the U.S. Bankruptcy Court for the District of Delaware. The application seeks approval under 11 U.S.C. § 327(a) and lists the services the firm would provide, working alongside Weil, Gotshal & Manges LLP. It sets out hourly rate ranges, including $850 to $1,300 an hour for directors, and discloses a prepetition Retainer of $235,428 to be held as an evergreen retainer. It states that, to the debtors' knowledge, the firm is a disinterested person. The debtors' General Counsel signs, and the application references a proposed order and supporting declarations as Exhibits A, B and C.

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Full text

RLF1 27977256v.2 
UNITED STATES BANKRUPTCY COURT 
DISTRICT OF DELAWARE 
------------------------------------------------------------ x 
 
In re 
: 
Chapter 11 
 
: 
 
KABBAGE, INC. d/b/a KSERVICING, et al., : 
Case No. 22-10951 (CTG) 
 
: 
 
 
: 
(Jointly Administered) 
 
: 
 
 
 
Debtors.1 
: 
Objection Deadline: TBD 
 
: 
Hearing Date: TBD 
------------------------------------------------------------ x 
 
 
APPLICATION OF DEBTORS TO RETAIN AND EMPLOY 
RICHARDS, LAYTON & FINGER, P.A. AS CO-COUNSEL TO 
THE DEBTORS EFFECTIVE AS OF PETITION DATE 
 
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”), respectfully 
move and represent as follows in support of this application (the “Application”): 
Relief Requested 
1. 
By this Application, the Debtors request, pursuant to section 327(a) of title 
11 of the United States Code (the “Bankruptcy Code”), Rules 2014(a) and 2016 of the Federal 
Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Rule 2014-1 of the Local Rules 
of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of 
Delaware (the “Local Rules”), that the Court authorize the employment and retention of 
Richards, Layton & Finger, P.A. (“RL&F”) as co-counsel to the Debtors effective as of the 
Petition Date (as defined below).   
 
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. 
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2. 
A proposed form of order granting the relief requested herein is annexed 
hereto as Exhibit A (the “Proposed Order”).  The Debtors submit the declaration of Daniel J. 
DeFranceschi, a director of RL&F, which is attached hereto as Exhibit B (the “DeFranceschi 
Declaration”) and the declaration of Holly Loiseau, the General Counsel of the Debtors, which 
is attached hereto as Exhibit C (the “Loiseau Declaration”).   
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 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 October 3, 2022 (the “Petition Date”), the Debtors commenced with 
the Court voluntary cases under chapter 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. 
5. 
Pursuant to Bankruptcy Rule 1015(b), the Chapter 11 Cases are being 
jointly administered under the above-captioned case. 
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6. 
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 [Docket No. 13] (the “First Day Declaration”) filed on the Petition Date. 
Scope of Services 
7. 
The Debtors require RL&F to render a variety of legal services during the 
pendency of these Chapter 11 Cases and to assist the Debtors in addressing the myriad issues that 
may arise.  Subject to further order of the Court, the Debtors request the employment and 
retention of RL&F to render professional services, including, but not limited to: 
a. 
Assisting in pre-bankruptcy preparation and planning; 
b. 
assisting in preparing necessary petitions, motions, applications, answers, 
orders, reports, and papers necessary to commence these Chapter 11 
Cases;  
c. 
advising the Debtors of their rights, powers, and duties as debtors and 
debtors in possession under chapter 11 of the Bankruptcy Code; 
d. 
taking all necessary actions to protect and preserve the Debtors’ estates, 
including the prosecution of actions on the Debtors’ behalf, the defense of 
any actions commenced against the Debtors in the Chapter 11 Cases, the 
negotiation of disputes in which the Debtors are involved, and the 
preparation of objections to claims filed against the Debtors’ estates; 
e. 
assisting with any sale or sales of assets, including preparing any 
necessary motions and papers related thereto; 
f. 
assisting in preparing the Debtors’ disclosure statement and any related 
motions, pleadings, or others documents necessary to solicit votes on any 
plan of reorganization; 
g. 
assisting in preparing the Debtors’ chapter 11 plan; 
h. 
prosecuting on behalf of the Debtors any proposed plan and seeking 
approval of all transactions contemplated therein and in any amendments 
thereto; and 
i. 
performing all other necessary legal services in connection with the 
prosecution of these Chapter 11 Cases. 
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8. 
In addition to the services set forth in paragraphs 7(a) through 7(i) above, 
RL&F may perform all other services assigned to it by the Debtors, in consultation with Weil, 
Gotshal & Manges LLP (“Weil”), the Debtors’ restructuring co-counsel.  To the extent RL&F 
determines that such services fall outside of the scope of services historically or generally 
performed by RL&F as co-counsel in a bankruptcy case, RL&F will file a supplemental 
declaration. 
Basis for Relief 
9. 
Under section 327(a) of the Bankruptcy Code, a debtor in possession 
“with the court’s approval, may employ one or more attorneys . . . that do not hold or represent 
an interest adverse to the estate, and that are disinterested persons, to represent or assist the 
[debtor in possession] in carrying out [its] duties under this title.”  11 U.S.C. § 327(a).  Such 
employment may be based “on any reasonable terms and conditions of employment, including 
on a retainer, on an hourly basis, on a fixed percentage fee basis, or on a contingent fee basis.”  
11 U.S.C § 328(a). 
10. 
The Debtors believe that RL&F is well qualified to represent them in their 
bankruptcy cases in an efficient and timely manner.  The Debtors have selected RL&F as their 
bankruptcy co-counsel because of, among other things, (i) the firm’s extensive experience and 
knowledge in the field of debtors’ and creditors’ rights, business reorganizations and liquidations 
under chapter 11 of the Bankruptcy Code, (ii) its expertise, experience, and knowledge in 
practicing before this Court, (iii) its proximity to the Court, and (iv) its ability to respond quickly 
to emergency hearings and other emergency matters.  RL&F’s services will enable the Debtors 
to execute faithfully their duties as debtors in possession. 
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11. 
To that end, RL&F has stated its desire and willingness to act in these 
Chapter 11 Cases and to render the necessary professional services as co-counsel to the Debtors.  
12. 
In addition to this Application, the Debtors have filed, or expect to file 
shortly, applications to employ (i) Weil, as general restructuring counsel; (ii) Omni Agent 
Solutions, Inc., as claims and notice agent and administrative agent; and (iii) AlixPartners, LLP, 
as financial advisor.  The Debtors may also file applications to employ additional professionals.  
The Debtors understand the division of responsibilities among these professionals and intend to 
monitor carefully these and any other retained professionals to ensure a clear delineation of their 
respective duties and roles to prevent duplication of effort.  The Debtors recognize that efficient 
coordination of efforts among the Debtors’ professionals will greatly add to the effective 
administration of these Chapter 11 Cases. 
Professional Compensation 
A. Professional Fees  
13. 
The Debtors understand that RL&F intends to apply to the Court for 
allowance of compensation and reimbursement of expenses in accordance with the applicable 
provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and any applicable 
orders of this Court.   In that regard, the Debtors and RL&F are developing a prospective budget 
and staffing plan in a reasonable effort to comply with any requests for information and 
additional disclosures that may be made by the Office of the United States Trustee for the 
District of Delaware (the “U.S. Trustee”).  Subject to the foregoing, the Debtors propose to pay 
RL&F its customary hourly rates in effect from time to time as set forth in the DeFranceschi 
Declaration.  The Debtors submit that these rates are reasonable. 
14. 
RL&F’s current hourly rates for matters related to these Chapter 11 Cases 
are expected to be within the following ranges:  
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Position 
Range of Hourly Rates 
Directors 
$850 to $1,300 an hour 
Counsel 
$725 to $750 an hour 
Associates 
$425 to $700 an hour 
Paraprofessionals 
$315 an hour 
 
15. 
The principal professionals and paraprofessionals designated to represent 
the Debtors and their current standard hourly rates are as follows:  
a. 
Daniel J. DeFranceschi 
 
$1,100 per hour 
b. 
Amanda R. Steele 
 
 
$875 per hour 
c. 
Zachary I. Shapiro 
 
 
$850 per hour 
d. 
Matthew P. Milana 
 
 
$600 per hour 
e. 
Huiqi Liu 
 
 
 
$475 per hour 
f. 
M. Lynzy McGee 
 
 
$315 per hour 
16. 
The Debtors understand that RL&F’s hourly rates are set at a level 
designed to compensate RL&F fairly for the work of its attorneys and paralegals and to cover 
fixed and routine expenses.  Hourly rates vary with the experience and seniority of the 
individuals assigned.  These hourly rates are subject to periodic adjustments to reflect economic 
and other conditions (which adjustments will be reflected in the first RL&F fee application 
following such adjustments) and are consistent with the rates charged elsewhere.  
17. 
Other than the periodic adjustments described above, RL&F’s hourly rates 
of its attorneys and financial terms for the services performed prior to the Petition Date are 
identical to the hourly rates and financial terms of the postpetition engagement proposed herein.  
The Debtors understand that these hourly rates are consistent with the rates that RL&F charges 
other comparable chapter 11 clients, regardless of the location of the chapter 11 case, and are not 
significantly different from the rates that RL&F charges in non-bankruptcy representations.  
None of RL&F’s professionals included in this engagement have varied their rate based on the 
geographic location of these Chapter 11 Cases.  Notwithstanding the consistent hourly rates, 
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RL&F as a practice reviews all time charges and makes adjustments as necessary to correct any 
inefficiency that may appear before billing.  
18. 
Prior to the Petition Date, the Debtors made total retainer payments to RL&F in 
the amount of $235,428 (the “Retainer”).  The Retainer was utilized as a retainer to cover fees 
and expenses actually incurred, as well as anticipated to be incurred, prior to, and in connection 
with, the Debtors’ restructuring and the commencement of these Chapter 11 Cases.  The Debtors 
propose that the remainder of the Retainer paid to RL&F and not expended for prepetition 
services and disbursements be treated as an evergreen retainer to be held by RL&F as security 
throughout these bankruptcy cases until RL&F’s fees and expenses are awarded by final order 
and payable to RL&F.  
19. 
Given the extensive nature of the services that RL&F will provide to the 
Debtors, the retention of RL&F under an evergreen retainer is appropriate and necessary to 
enable the Debtors to faithfully execute their duties as debtors and debtors in possession and to 
implement the reorganization of the Debtors. 
20. 
Other than as set forth in the DeFranceschi Declaration, no arrangement is 
proposed between the Debtors and RL&F for compensation to be paid in these Chapter 11 Cases.  
RL&F has informed the Debtors that it has no agreement with any other entity to share any 
compensation received, nor will any be made, except as permitted under section 504(b)(1) of the 
Bankruptcy Code. 
B.  Expenses  
21. 
The Debtors understand that it is RL&F’s policy to charge its clients in all 
areas of practice for all expenses incurred in connection with clients’ cases.  The expenses 
charged to clients include, among other things, long-distance telephone charges, regular mail, 
and express mail charges, special or hand delivery charges, document processing charges, 
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printing and photocopying charges, travel expenses, expenses for “working meals,” 
computerized research charges and transcription costs, as well as non-ordinary overhead 
expenses such as secretarial and certain other overtime.  RL&F will charge the Debtors for these 
expenses in a manner and at rates consistent with charges made generally to RL&F’s other 
clients or as previously fixed by the Local Rules.  The Debtors understand that it is RL&F’s 
belief that it is fair to charge these expenses to the client incurring them instead of increasing 
hourly rates and spreading these expenses among all clients. 
RL&F’s Disinterestedness 
22. 
To the best of the Debtors’ knowledge and except as is disclosed in the 
DeFranceschi Declaration: (a) RL&F is a “disinterested person” under section 101(14) of the 
Bankruptcy Code; (b) RL&F does not hold or represent an interest adverse to the Debtors’ 
estates; and (c) neither RL&F, nor any attorney (including any director, counsel or associate) of 
RL&F, currently represents, or has in the past represented, or has any connection with, the 
potential parties in interest set forth on Exhibit 3 to the DeFranceschi Declaration. 
23. 
RL&F will supplement its disclosure to the Court if any facts or 
circumstances are discovered that would require such additional disclosure.  
Bankruptcy Rule 5002 
24. 
As set forth in the DeFranceschi Declaration, and except as described 
therein, no director, counsel, or associate of RL&F is a relative of, or has been so connected 
with, any United States Bankruptcy Judge for the District of Delaware, any of the District Court 
Judges for the District of Delaware who handle bankruptcy cases, the United States Trustee for 
Region 3, the Assistant United States Trustee for the District of Delaware, the attorneys for the 
United States Trustee assigned to these Chapter 11 Cases or any other employee of the United 
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States Trustee that would render RL&F’s retention in these Chapter 11 Cases improper under 
Bankruptcy Rule 5002.  Accordingly, the appointment of RL&F is not prohibited by Bankruptcy 
Rule 5002. 
Notice 
25. 
Notice of this Application has been or 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; and (l) any party that is entitled to notice pursuant to Bankruptcy Rule 
2002.  The Debtors believe that no further notice is required. 
No Prior Request 
26. 
No previous request for the relief sought herein has been made by the 
Debtors to this or any other court. 
 
 
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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 4, 2022 
Atlanta, Georgia 
 
 
KABBAGE, INC. d/b/a KSERVICING et al. 
(on behalf of itself and each of its affiliated 
Debtors) 
 
 
/s/ Holly Loiseau 
 
Name:  Holly Loiseau 
Title:    General Counsel 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Case 22-10951-CTG    Doc 46    Filed 10/04/22    Page 10 of 10

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