Order — Employ Ordinary Course Professionals — In re KServicing

Record facts

U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 196 · 2022-11-02 · Docket on CourtListener

Full text

RLF1 28186998v.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 (CTG) 
 
: 
 
 
: 
(Jointly Administered) 
 
 
Debtors.1 
: 
  
------------------------------------------------------------ x 
Re: Docket No. 110 
 
ORDER AUTHORIZING DEBTORS TO EMPLOY 
PROFESSIONALS USED IN ORDINARY COURSE OF BUSINESS 
 
Upon the motion, dated October 17, 2022 (the “Motion”)2 of 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”), pursuant to sections 105(a), 327, and 330 of the 
Bankruptcy Code for entry of an order authorizing the Debtors to employ Ordinary Course 
Professionals, effective as of the Petition Date, without the submission of separate employment 
applications or the issuance of separate retention orders for each professional, all as more fully set 
forth in the Motion; and upon consideration of the First Day Declaration; and this Court having 
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 
 
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. 
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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; and all objections, if any, 
to the Motion having been withdrawn, resolved, or overruled; 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 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 as set forth herein. 
2. 
The Debtors are authorized, but not directed, pursuant to sections 105(a), 
327, and 330 of the Bankruptcy Code, to retain, employ, and compensate the Ordinary Course 
Professionals listed on Exhibit 1 and Exhibit 2 annexed hereto, as such may be supplemented in 
accordance with Paragraph f below, subject to the following OCP Procedures, effective as of the 
Petition Date: 
a. 
Pursuant to sections 105(a), 327, and 330 of the Bankruptcy Code, the 
Debtors shall be authorized to employ the Ordinary Course Professionals 
listed on Exhibit 1 hereto (the “Tier 1 Ordinary Course Professionals”) 
and the Ordinary Course Professionals listed on Exhibit 2 hereto (the “Tier 
2 Ordinary Course Professionals”) in accordance with these OCP 
Procedures, effective as of the Petition Date.  To the extent that additional 
Ordinary Course Professionals are added to Exhibit 1 or Exhibit 2 pursuant 
to the procedures set forth in Paragraph f below, their employment will be 
effective on a date in accordance with said procedures.  
b. 
Within five (5) business days after the date of entry of this Order, the 
Debtors shall serve this Order on each Ordinary Course Professional.  
Thereafter, each Ordinary Course Professional shall provide the Debtors’ 
attorneys within 30 days after the later of (i) the date of entry of this Order 
or (ii) the date on which the Ordinary Course Professional commences 
rendering services for the Debtors, with a declaration, substantially in the 
form annexed as Exhibit 3 hereto (the “OCP Declaration”).   
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c. 
The Debtors’ attorneys shall file the OCP Declaration with the Court and 
serve a copy upon (i) Richard L. Schepacarter, Office of the United States 
Trustee (Richard.Schepacarter@usdoj.gov), (ii) Rosa Sierra-Fox, Office of 
the United States Trustee (Rosa.Sierra-Fox@usdoj.gov), and (iii) counsel 
for the Creditors’ Committee, if any (collectively, the “Reviewing 
Parties”). 
d. 
The Reviewing Parties shall have 14 days after service of the OCP 
Declaration (the “Objection Deadline”) to serve upon the Debtors, the 
other Reviewing Parties, and the relevant Ordinary Course Professional a 
written objection to the retention, employment, or compensation of the 
Ordinary Course Professional based on the contents of the OCP Declaration 
(an “Objection”).  The Objection Deadline shall be conspicuously stated 
on the OCP Declaration.  
e. 
If no Objection is served by the Objection Deadline, the retention, 
employment, and compensation of the Ordinary Course Professional shall 
be deemed approved pursuant to section 327 of the Bankruptcy Code 
without the need for a hearing and without further order of this Court; 
provided, however, that if an Objection is served by the Objection Deadline 
and such Objection cannot be resolved within 20 calendar days, the Debtors 
shall schedule the matter for a hearing before this Court on the next 
regularly-scheduled hearing date or such other date otherwise agreeable to 
the Ordinary Course Professional, the Debtors, and the objecting party. The 
Debtors shall not pay any fees and expenses to any Ordinary Course 
Professional unless (a) such Ordinary Course Professional has executed its 
OCP Declaration and such OCP Declaration was filed with the Court and 
served on the Reviewing Parties, (b) the Objection Deadline has expired, 
and (c) no timely Objection is pending.  If a timely Objection is served, no 
payment shall be made until such Objection is either resolved or withdrawn 
or overruled by the Court.  
f. 
The Debtors may seek to retain additional Ordinary Course Professionals 
throughout these cases by (i) including each additional Ordinary Course 
Professional on a supplement to Exhibit 1 or Exhibit 2 hereto, as 
applicable, that is filed with this Court and served on the Reviewing Parties 
and (ii) having such additional Ordinary Course Professional comply with 
the OCP Procedures.  The approved retention of the additional Ordinary 
Course Professional(s) will be effective as of the expiration of the Objection 
Deadline or, if a timely Objection is filed, upon resolution of such 
Objection. 
g. 
Once an Ordinary Course Professional is retained in accordance with these 
OCP Procedures, the Debtors may pay such Ordinary Course Professional 
100% of the fees and 100% of the expenses incurred, upon the submission 
to, and approval by, the Debtors of an appropriate invoice setting forth in 
reasonable detail the nature of the services rendered and the expenses 
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actually incurred (without prejudice to the Debtors’ right to dispute any such 
invoices); provided, however, that a Tier 1 Ordinary Course Professional’s 
total compensation and reimbursement shall not exceed $35,000 per month 
on average over any three-month period on a rolling basis (the “Tier 1 
Cap”), and a Tier  2 Ordinary Course Professional’s total compensation and 
reimbursement shall not exceed $50,000 per month on average over any 
three-month period on a rolling basis (the “Tier 2 Cap” and together with 
the Tier 1 Cap, the “Monthly Fee Cap”). 
h. 
In the event that an Ordinary Course Professional’s fees and expenses 
exceed the applicable Monthly Fee Cap for any month during these chapter 
11 cases, but the Debtors believe the Ordinary Course Professional should 
not otherwise be required to follow the payment procedure applicable to the 
formally retained professionals, the Debtors may seek the agreement of the 
Reviewing Parties to a higher cap for any such Ordinary Course 
Professional.  If the Debtors are able to obtain such agreement of the 
Reviewing Parties, the agreement would be evidenced by the filing of a 
notice of increased Monthly Fee Cap (the “Cap Increase Notice”), and the 
increased Monthly Fee Cap shall be deemed approved upon the filing of 
such Cap Increase Notice, without further action by this Court.  Absent such 
an agreement of the Reviewing Parties, if the applicable Monthly Fee Cap 
is exceeded, such Ordinary Course Professional must file a fee application 
(a “Fee Application”) and apply for allowance of the full amount of its 
compensation and reimbursement for the applicable time period in 
compliance with sections 330 and 331 of the Bankruptcy Code and the 
applicable provisions of the Bankruptcy Rules, the Local Rules, and any 
other procedures and orders of this Court.  The U.S. Trustee reserves the 
right to request that any Ordinary Course Professional that is regularly 
exceeding the applicable Monthly Fee Cap be the subject of a retention 
application pursuant to section 327 of the Bankruptcy Code.  Any such 
Ordinary Course Professional that is an attorney shall make a reasonable 
effort to comply with the U.S. Trustee’s requests for information and 
disclosures as set forth in the Guidelines for Reviewing Applications for 
Compensation and Reimbursement of Expenses Filed under 11 U.S.C. 
§ 330 by Attorneys in Larger Chapter 11 Cases (effective as of November 
1, 2013) in connection with such Fee Application and/or retention 
application, and shall provide corresponding LEDES date or searchable 
format for the respective invoices. 
i. 
Each Fee Application shall be served upon the Reviewing Parties.  The 
Reviewing Parties shall then have 15 days to object to the Fee Application, 
which deadline shall be set forth on the Fee Application.  If, after 15 days, 
no Objection is filed, the fees and expenses requested in the Fee Application 
shall be deemed approved, and the Ordinary Course Professional may be 
paid 100% of its fees and expenses without the need for further action from 
such Ordinary Course Professional. 
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j. 
At three-month intervals during the pendency of these chapter 11 cases 
(each, a “Quarter”), beginning with the Quarter ending December 31, 
2022, the Debtors shall file with this Court and serve on the Reviewing 
Parties, no later than 30 days after the last day of such Quarter, a statement 
that shall include the following information for each Ordinary Course 
Professional: (i) the name of the Ordinary Course Professional, (ii) the 
amounts invoiced and  paid as compensation for services rendered and 
reimbursement of expenses incurred by that Ordinary Course Professional 
during the reported Quarter broken down by month, (iii) the aggregate 
amount of postpetition payments made to that Ordinary Course Professional 
to date, and (iv) a general description of the services rendered by that 
Ordinary Course Professional (the “Quarterly Statement”).  In the event 
that a Quarterly Statement shows that an Ordinary Course Professional 
and/or the Debtors are not complying with the applicable Monthly Fee Cap 
(as may be modified by the Cap Increase Notice), any rights of the U.S. 
Trustee are reserved. 
k. 
To the extent any Ordinary Course Professional is required to file a Fee 
Application pursuant to the OCP Procedures, any such payments shall be 
subject to section 328(c) of the Bankruptcy Code. 
3. 
Entry of this Order and approval of the OCP Procedures does not affect the 
Debtors’ ability to (i) dispute any invoice submitted by an Ordinary Course Professional or 
(ii) retain additional Ordinary Course Professionals from time to time as needed, in accordance 
with the OCP Procedures, and the Debtors reserve all of their rights with respect thereto. 
4. 
The monetary caps set forth in the OCP Procedures are without prejudice to 
the Debtors’ ability to request that this Court increase the terms of such caps at a later time. 
5. 
The form of OCP Declaration is approved. 
6. 
Nothing contained in the Motion or this Order nor any payment made 
pursuant to the authority granted by this Order is intended to be or shall be construed as (i) an 
admission as to the validity of any claim against the Debtors, (ii) 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, (iii) a waiver of any claims or causes of action which may exist against any 
creditor or interest holder, or (iv) an approval, assumption, adoption, or rejection of any agreement, 
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contract, lease, program, or policy between the Debtors and any third party under section 365 of 
the Bankruptcy Code. 
7. 
All time periods referenced in this Order shall be calculated in accordance 
with Bankruptcy Rule 9006(a). 
8. 
The Debtors are authorized to take all actions necessary or appropriate to 
effectuate the relief granted in this 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 Order. 
Dated: November 2nd, 2022 
Wilmington, Delaware
CRAIG T. GOLDBLATT 
UNITED STATES BANKRUPTCY JUDGE
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