Interim order — payment of prepetition employee wages and benefits — In re KServicing

Record facts

U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 75 · 2022-10-06 · Docket on CourtListener

Summary

An interim order entered October 6, 2022 as Doc 75 by United States Bankruptcy Judge Craig T. Goldblatt 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. It grants on an interim basis the debtors' October 3, 2022 motion, authorizing payment of prepetition Employee Obligations up to $1,050,800 and continuation of employee benefit programs. A chart allocates that total, including $600,000 for deferred 2020 payroll tax and $400,000 for contractor workforce compensation. The order excludes bonus, severance and insider payments and payments above the caps in sections 507(a)(4) and (5) of the Bankruptcy Code. It sets a final hearing for October 26, 2022, with objections due October 19, 2022.

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Full text

RLF1 28023540v.1 
IN THE 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 (CTG) 
 
: 
 
 
: 
 
 
 
Debtors.1 
: 
: 
: 
(Jointly Administered)  
 
Ref. Docket No. 10 
------------------------------------------------------------ x 
 
INTERIM ORDER (I) AUTHORIZING DEBTORS TO 
(A) PAY PREPETITION WAGES, SALARIES, EMPLOYEE BENEFITS, AND OTHER 
COMPENSATION AND (B) MAINTAIN EMPLOYEE BENEFIT PROGRAMS 
AND PAY RELATED OBLIGATIONS AND (II) GRANTING RELATED RELIEF 
Upon the motion, dated October 3, 2022 (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 pursuant to sections 105(a), 363(b), and 507(a) 
of the Bankruptcy Code and Bankruptcy Rules 6003 and 6004, (i) authorizing the Debtors to 
(a) pay the Employee Obligations and (b) maintain, continue to honor, and pay amounts with 
respect to the Debtors’ business practices, programs, and policies for their employees as such were 
in effect as of the commencement of these Chapter 11 Cases and as such may be modified during 
the pendency of these Chapter 11 Cases and (ii) granting related relief, all as more fully set forth 
in the Motion; and upon consideration of the Rieger-Paganis  Declaration; and this Court having 
                                                 
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 meanings ascribed to such terms in the 
Motion. 
Case 22-10951-CTG    Doc 75    Filed 10/06/22    Page 1 of 5

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RLF1 28023540v.1 
jurisdiction to consider the Motion and the relief requested therein 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; 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 this Court having held a hearing to consider the relief requested 
in the Motion; and all objections, if any, to the Motion having been withdrawn, resolved, or 
overruled; and upon 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 Bankruptcy Rule 6003; and upon all of 
the proceedings had before this Court 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), and 507(a) of the Bankruptcy Code to (i) pay the prepetition Employee Obligations in an 
aggregate amount not to exceed, absent further order of this Court, $1,050,800, (ii) pay any related 
expenses, fees and costs incident to the foregoing, and (iii) maintain, honor, and continue the 
Employee Benefit Programs in the ordinary course of business, as summarized in further detail in 
the chart below: 
Case 22-10951-CTG    Doc 75    Filed 10/06/22    Page 2 of 5

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RLF1 28023540v.1 
Employee Obligations 
Interim Amount 
Administration Fees 
$1,000 
Compensation 
$35,000 
Employee Bonus Program 
$0 
Employee Benefit Programs 
$2,000 
Employer Taxes 
$3,000 
Deferred 2020 Payroll Tax 
$600,000 
Reimbursement Programs  
$5,000 
Contractor Workforce Compensation 
$400,000 
Employee Leave Benefits 
$0 
Health and Welfare Benefits 
$2,800 
Retirement Benefits 
$2,000 
Total  
$1,050,800 
 
3. 
Notwithstanding any other provision of this Interim Order nothing in this 
Interim Order shall authorize the Debtors to make any payment to, or on behalf of, any Employee 
or Contractor on account of prepetition wages and other compensation obligations or other 
prepetition obligations in excess of the statutory caps set forth in sections 507(a)(4) and (5) of the 
Bankruptcy Code. 
4. 
Nothing in the Motion or this Interim Order shall be deemed to (i) authorize 
the payment of any amounts in satisfaction of bonus or severance obligations, including but not 
limited to the KERP program or the Employee Bonus Program, or which are subject to section 
503(c) of the Bankruptcy Code, including, for the avoidance of doubt, payment of any obligations 
Case 22-10951-CTG    Doc 75    Filed 10/06/22    Page 3 of 5

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RLF1 28023540v.1 
to or on behalf of any “insider” (as defined by section 101(31) of the Bankruptcy Code) of the 
Debtors or any non-Debtor affiliates, or violate or permit a violation of section 503(c) of the 
Bankruptcy Code; or (ii) authorize the Debtors to cash out unpaid vacation or leave time except 
upon termination of an employee, if applicable state law requires such payment. 
5. 
The Banks are authorized to receive, process, honor, and pay any and all 
checks issued, or to be issued, and electronic funds transfers requested, or to be requested, by the 
Debtors relating to such obligations, to the extent that sufficient funds are on deposit and standing 
in the Debtors’ credit in the applicable bank accounts to cover such payments.  The Banks are 
authorized to 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 prior to, on, or subsequent to the Petition Date, without any duty to inquire 
otherwise. 
6. 
The Debtors are authorized, but not directed, to issue new post-petition 
checks, or effect new electronic funds transfers, 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 with respect to any prepetition amounts that are authorized to be 
paid pursuant to this Interim Order. 
7. 
Nothing contained in the Motion or this Interim Order, nor any payment 
made pursuant to the authority granted by this Interim Order, is intended to be or shall be construed 
as 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. 
Case 22-10951-CTG    Doc 75    Filed 10/06/22    Page 4 of 5

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RLF1 28023540v.1 
8. 
Nothing in this Interim Order shall implicitly or expressly approve or 
sanction any current or prospective incentive bonus, key employee incentive or retention program, 
or any payment having been made in relation to or pursuant thereto.  
9. 
The requirements of Bankruptcy Rule 6003(b) have been satisfied. 
10. 
Notice of the Motion is adequate under Bankruptcy Rule 6004(a). 
11. 
Notwithstanding the provisions of Bankruptcy Rule 6004(h), this Interim 
Order shall be immediately effective and enforceable upon its entry. 
12. 
The Debtors are authorized to take all actions necessary or appropriate to 
effectuate the relief granted in this Interim Order. 
13. 
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. 
14. 
The final hearing to consider the relief requested in the Motion shall be held 
on October 26, 2022 at 10:30 a.m. (Prevailing Eastern Time), and any objections or responses to 
the Motion shall be in writing, filed with the Court, and served so as to be actually received on or 
prior to October 19, 2022 at 4:00 p.m. (Prevailing Eastern Time). 
Dated: October 6th, 2022 
Wilmington, Delaware
CRAIG T. GOLDBLATT 
UNITED STATES BANKRUPTCY JUDGE
Case 22-10951-CTG    Doc 75    Filed 10/06/22    Page 5 of 5

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