Court filing
Motion to Extend Civil Action Removal Deadline — In re KServicing (Nov. 23, 2022) (Bankr. D. Del.)
Filed November 23, 2022 in Kservicing Bankruptcy; one of 140 filings from this case.
Record facts
| Court | U.S. Bankruptcy Court for the District of Delaware |
|---|---|
| Filed | 2022-11-23 |
U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 284 · 2022-11-23 · Docket on CourtListener
Full text
RLF1 28244929v.1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
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:
In re
:
Chapter 11
:
KABBAGE, INC. d/b/a KSERVICING, et al.,
:
Case No. 22-10951 (CTG)
:
:
Debtors.1
:
:
(Jointly Administered)
:
:
:
Obj. Deadline: November 30, 2022 at 4:00 p.m. (ET)
Hr’g Date: December 7, 2022 at 10:00 a.m. (ET)
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DEBTORS’ MOTION FOR AN ORDER
(I) EXTENDING THE DEADLINE BY WHICH THE DEBTORS
MAY REMOVE CIVIL ACTIONS, AND (II) 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”), respectfully
represent as follows in support of this motion (the “Motion”):
Relief Requested
1.
By this Motion, the Debtors request, pursuant to section 1452 of title 28 of
the United States Code (the “Judicial Code”) and Rules 9006(b) and 9027 of the Federal Rules of
Bankruptcy Procedure (the “Bankruptcy Rules”), entry of an order (i) extending the deadline by
which the Debtors may file notices of removal under Bankruptcy Rule 9027(a) (the “Removal
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.
Case 22-10951-CTG Doc 284 Filed 11/23/22 Page 1 of 7
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Deadline”) by 120 days from the current deadline, through and including May 3, 2023, and (ii)
granting related relief. 2
2.
A proposed form of order granting the relief requested herein is annexed
hereto as Exhibit A (the “Proposed Order”).
Jurisdiction
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 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 to the extent 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 each commenced
with this Court a voluntary case under chapter 11 of title 11 of the United States Code (the
“Bankruptcy Code” and such cases commenced thereunder, the “Chapter 11 Cases”). The
Debtors are authorized to continue to operate their business as debtors in possession pursuant to
sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner, or statutory committee
of creditors has been appointed in these Chapter 11 Cases.
2 Pursuant to Rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy
Court for the District of Delaware, the filing of this Motion prior to the expiration of the current Removal Deadline
automatically extends such deadline until such time as the Court enters an order with respect to the relief requested
herein.
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5.
Pursuant to Bankruptcy Rule 1015(b), the Chapter 11 Cases are being
jointly administered under the above captioned case.
6.
Additional information regarding the Debtors’ businesses, 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”).3
Relief Requested Should Be Granted
7.
Bankruptcy Rule 9027 and section 1452 of the Judicial Code govern the
removal of pending civil actions. Specifically, section 1452(a) of the Judicial Code provides:
A party may remove any claim or cause of action in a civil action
other than a proceeding before the United States Tax Court or a civil
action by a governmental unit to enforce such governmental unit’s
police or regulatory power, to the district court for the district where
such civil action is pending, if such district court has jurisdiction of
such claim or cause of action under section 1334 of this title.
28 U.S.C. § 1452(a).
8.
Bankruptcy Rule 9027(a)(2) further provides, in pertinent part:
If the claim or cause of action in a civil action is pending when a
case under the [Bankruptcy] Code is commenced, a notice of
removal may be filed only within the longest of (A) 90 days after
the order for relief in the case under the [Bankruptcy] Code, (B) 30
days after entry of an order terminating a stay, if the claim or cause
of action in a civil action has been stayed under § 362 of the
[Bankruptcy] Code, or (C) 30 days after a trustee qualifies in a
chapter 11 reorganization case but not later than 180 days after the
order for relief.
Fed. R. Bankr. P. 9027(a)(2).
3 Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the First
Day Declaration.
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9.
With respect to postpetition actions, Bankruptcy Rule 9027(a)(3) provides
that a notice of removal may be filed:
only within the shorter of (A) 30 days after receipt, through service
or otherwise, of a copy of the initial pleading setting forth the claim
or cause of action sought to be removed, or (B) 30 days after receipt
of the summons if the initial pleading has been filed with the court
but not served with the summons.
Fed. R. Bankr. P. 9027(a)(3).
10.
Bankruptcy Rule 9006(b) provides that the court may extend unexpired time
periods, such as the Debtors’ removal period, without notice:
[W]hen an act is required or allowed to be done at or within a
specified period by these rules or by a notice given thereunder or by
order of court, the court for cause shown may at any time in its
discretion . . . with or without motion or notice order the period
enlarged if the request therefor is made before the expiration of the
period originally prescribed or as extended by a previous order . . . .
Fed. R. Bankr. P. 9006(b)(1).
11.
It is well-settled that this Court is authorized to extend, for cause, the
removal period provided under 28 U.S.C. § 1452 and Bankruptcy Rule 9027. See Pacor, Inc. v.
Higgins, 743 F.2d 984, 996 n.17 (3d Cir. 1984), overruled on other grounds by Things
Remembered, Inc. v. Petrarca, 516 U.S. 124, 134-35 (1995) (holding that the bankruptcy court’s
power to grant an extension of the removal period pursuant to Bankruptcy Rule 9006(b) is “clear”);
see also Caperton v. A.T. Massey Coal Co., Inc., 251 B.R. 322, 325 (S.D. W. Va. 2000) (explaining
that Bankruptcy Rule 9006 provides authority to enlarge time periods for removing actions under
Bankruptcy Rule 9027); Raff v. Gordon, 58 B.R. 988, 990 (E.D. Pa. 1986) (finding that an
expansion of time to file notices of removal is authorized under the Bankruptcy Rules); In re World
Fin. Servs. Ctr., Inc., 81 B.R. 33, 39 (Bankr. S.D. Cal. 1987) (providing that the United States
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Supreme Court intended to give bankruptcy judges the power to enlarge the filing periods under
Bankruptcy Rule 9027(a) pursuant to Bankruptcy Rule 9006(b)).
12.
Cause exists to extend the Removal Deadline in these Chapter 11 Cases by
120 days from the current removal deadline, January 3, 2023, through and including May 3, 2023.
Since the Petition Date, the Debtors have worked diligently to, among other things, (i) stabilize
and transition their operations into chapter 11; (ii) negotiate and obtain Court approval of the
consensual use of cash collateral with the Federal Reserve Bank of San Francisco; (iii) execute,
memorialize, and obtain approval of a settlement with one of their Partner Banks—Customers
Bank; (iv) prepare and file their schedules of assets and liabilities and statements of financial
affairs; (v) file a chapter 11 plan (the “Plan”) and related disclosure statement; and (vi) continue
to engage with their stakeholders on the various aspects of the Plan to maximize value for all
parties in interest.
13.
The Debtors are party to certain civil actions (such civil actions, collectively
with any other civil actions in other jurisdictions to which any of the Debtors are, or may become,
a party, the “Civil Actions”). To date, the Debtors have not made a determination as to which, if
any, of the Civil Actions they may seek to remove. Therefore, the Debtors believe that it is prudent
to seek an extension of the time prescribed under Bankruptcy Rule 9027(a), through and including
May 3, 2023, to protect their right to remove those Civil Actions if they deem it appropriate. The
extension sought will afford the Debtors a reasonable amount of additional time to determine
whether to remove any pending Civil Action, thereby ensuring that the Debtors do not forfeit
valuable rights under section 1452 of the Judicial Code. Among other things, the Debtors’ ability
to recover assets for the benefit of their estates could be unnecessarily hindered if the relief
requested herein were not granted. Further, the rights of the Debtors’ adversaries will not be
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prejudiced by such an extension because any party to an action that is removed may seek to have
the action remanded to the state court pursuant to section 1452(b) of the Judicial Code.
14.
The Debtors further request that the order approving this Motion be without
prejudice to (i) any position the Debtors may take regarding whether section 362 of the Bankruptcy
Code applies to stay any given Civil Action pending against the Debtors, and (ii) the right of the
Debtors to seek further extensions of the Removal Deadline.
15.
Accordingly, for the reasons stated above, the Debtors submit that the relief
requested herein is appropriate and in the best interests of the Debtors, their estates, and all
stakeholders. Therefore, the Debtors request that the Court extend the Removal Deadline by 120
days, through and including May 3, 2023.
Notice
16.
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 thirty (30) largest unsecured claims
against the Debtors on a consolidated basis; (c) the Federal Reserve Bank; (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) non-Debtor parties to the Civil Actions; and (m) any party that has requested notice
pursuant to Bankruptcy Rule 2002. The Debtors believe that no further notice is required.
No Prior Request
17.
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: November 23, 2022
Wilmington, Delaware
/s/ Matthew P. Milana
RICHARDS, LAYTON & FINGER, P.A.
Daniel J. DeFranceschi, Esq. (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. (admitted pro hac vice)
Candace M. Arthur (admitted pro hac vice)
Natasha S. Hwangpo (admitted pro hac vice)
Chase A. Bentley (admitted pro hac vice)
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
Attorneys for Debtors and Debtors in Possession
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