Court order (CFO retention) — In re KServicing (Bankr. D. Del.)

Record facts

U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 316 · 2022-12-02 · Docket on CourtListener

Full text

RLF1 28296617v.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) 
: 
 
Debtors.1 
: 
(Jointly Administered) 
 
 
: 
Re: Docket No. 258 
------------------------------------------------------------ x 
 
ORDER (I) AUTHORIZING DEBTORS TO EMPLOY AND RETAIN  
PHOENIX EXECUTIVE SERVICES, LLC TO PROVIDE A CHIEF 
FINANCIAL OFFICER AND (II) DESIGNATING MARC SULLIVAN AS  
DEBTORS’ CHIEF FINANCIAL OFFICER, EFFECTIVE AS OF OCTOBER 24, 2022 
 
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 above-captioned chapter 11 cases 
(collectively, the “Debtors”), pursuant to sections 105(a) and 363(b) of the Bankruptcy Code, for 
entry of an order (i) authorizing the Debtors to employ and retain Phoenix to provide the Debtors 
with a CFO and (ii) designating Marc Sullivan as CFO to the Debtors, in each case, effective as of 
October 24, 2022, all as more fully set forth in the Motion; and the Court having jurisdiction over 
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 as of February 29, 2012; 
and this matter being a core proceeding pursuant to 28 U.S.C. § 157(b); and venue being proper 
before the Court pursuant to 28 U.S.C. §§ 1408 and 1409; and due and proper notice of the Motion 
 
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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RLF1 28296617v.1 
having been provided to the Notice Parties; 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 to consider the relief requested in 
the Motion; and upon consideration of the Sullivan Declaration, annexed to the Motion as 
Exhibit C; 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 in the best interests of the Debtors, their estates, their creditors, and all parties in interest; 
and after due deliberation and sufficient cause appearing therefor, 
IT IS HEREBY ORDERED THAT 
1. 
The Motion is granted to the extent set forth herein. 
2. 
Pursuant to sections 105 and 363 of the Bankruptcy Code, the Debtors are 
hereby authorized to employ and retain Phoenix to provide the Debtors with Marc Sullivan as 
CFO, effective as of October 24, 2022, on the terms set forth in the Motion and the Engagement 
Letter, except as those terms are modified herein.  The terms below apply notwithstanding 
anything to the contrary in the Motion, the Sullivan Declaration, or the Engagement Letter: 
a. 
Phoenix and its affiliates shall not act in any other capacity (for example, 
and without limitation, as a financial advisor, claims agent/claims 
administrator, or investor/acquirer) in connection with these Chapter 11 
Cases;  
b. 
Phoenix shall file with the Court, and provide copies to the U.S. Trustee and 
any official committee(s) appointed in these Chapter 11 Cases, reports of 
compensation earned and expenses incurred on a monthly basis.  Such 
reports shall be filed on or after the 24th day of each month and contain 
summary charts, which describe the services provided, identify the 
compensation earned by Mr. Sullivan and other personnel (if any) for 
services provided, and itemize the expenses incurred.  The reports shall also 
include staffing on the Engagement for the previous month.  Such report 
shall include the names and functions filled of the individuals assigned (if 
any).  Time records shall (i) be appended to the reports, (ii) contain a 
breakdown of hours worked and rates charged according to defined project 
categories, and (iii) be organized by project category.  Mr. Sullivan will be 
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RLF1 28296617v.1 
compensated by the fixed Monthly Fee, however, the time entries shall 
identify the time spent on each project category in half (0.5) hour increments 
and the corresponding charge (time multiplied by hourly rate) for each task 
as if Mr. Sullivan’s hourly rate were to be applied.  Parties in interest shall 
have fourteen (14) days after the date each report is served to object to such 
report.  In the event an objection is raised and not consensually resolved, 
the portion of the report to which an objection is raised shall be subject to 
review by the Court.  Upon receipt of any objection, the Debtors shall 
deduct an amount equal to the objected to amount from the next payment(s) 
to Phoenix until such objection is resolved, either consensually or by Court 
order; 
c. 
In the event the Debtors seek to have Phoenix personnel, including Mr. 
Sullivan, assume executive officer positions that are different than the 
position disclosed in the Motion, or to materially change the terms of the 
Engagement by (i) modifying the functions of personnel, (ii) adding new 
personnel, or (iii) altering or expanding the scope of the Engagement, a 
motion to modify the retention shall be filed; 
d. 
No principal, employees, or independent contractor of Phoenix and its 
affiliates shall serve as a director of any of the Debtors during the pendency 
of these Chapter 11 Cases; 
e. 
The Debtors are permitted to indemnify Mr. Sullivan on the best available 
terms provided to the Debtors’ other officers and directors under the 
corporate bylaws and applicable state law, in addition to insurance coverage 
under the Debtors’ director and officer insurance policies, to the extent 
applicable; 
f. 
There shall be no indemnification of Phoenix or its affiliates; 
g. 
For the avoidance of doubt, Phoenix does not seek payment of a success 
fee, transaction fee, or other back-end fee for services in these Chapter 11 
Cases; however, any such success fees, transaction fees, or other back-end 
fees agreed to by Phoenix and the Debtors shall be approved by the Court 
at the conclusion of these Chapter 11 Cases on a reasonableness standard 
and are not being pre-approved by entry of this Order.  No  success fee, 
transaction fee, or back-end fee shall be sought upon conversion of these 
Chapter 11 Cases, dismissal of these Chapter 11 Cases for cause, or 
appointment of a trustee; 
h. 
For a period of three years after the conclusion of the Engagement, neither 
Phoenix nor any of its affiliates shall make any investments in the Debtors 
or Reorganized Debtors (if applicable); 
i. 
Phoenix shall disclose any and all facts that may have a bearing on whether 
Phoenix, its affiliates, and/or Mr. Sullivan or any other individuals (if any) 
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working on the Engagement hold or represent any interest adverse to the 
Debtors, their creditors, or other parties in interest.  If any new parties are 
provided to Phoenix in connection therewith or Phoenix discovers new 
material relevant facts or relationships, Phoenix will promptly file a 
supplemental declaration. The obligation in this subparagraph is a 
continuing obligation; 
j. 
During the course of these Chapter 11 Cases, Phoenix and Mr. Sullivan shall 
have whatever fiduciary duty is imposed upon them by applicable law;  
k. 
To the extent that any services are to be performed by any affiliate of 
Phoenix, that affiliate shall promptly file appropriate disclosures regarding 
any connections they may have with parties in interest in these Chapter 11 
Cases, as well as disclosures regarding their disinterestedness.  To the  
extent that Phoenix uses the services of independent contractors or 
subcontractors (collectively, the “Contractors”) in these Chapter 11 Cases, 
Phoenix shall (i) pass through the cost of such Contractors to the Debtors at 
the same rate that Phoenix pays the Contractors; (ii) seek reimbursement for 
actual costs only; (iii) ensure that the Contractors are subject to the same 
conflicts checks as required for Phoenix; and (iv) file with this Court such 
disclosures required by Bankruptcy Rule 2014(a) with respect to such 
Contractors; and 
l. 
The limitation of liability and contribution provision of the Engagement 
Letter are of no force and effect during the pendency of these Chapter 11 
Cases.  
3. 
The Debtors are authorized to pay Phoenix in such amounts and at such 
times as is provided in the Engagement Letter subject paragraph 2(b) above. 
4. 
Phoenix is entitled to reimbursement of actual and necessary expenses 
pursuant to the terms of the Engagement Letter and this Order; provided, however, that Phoenix 
shall not seek reimbursement of any fees incurred defending any of Phoenix’s fee applications or 
compensation reports in these Chapter 11 Cases. 
5. 
The Debtors are authorized to take all action necessary to effectuate the 
relief granted in this Order. 
6. 
This Order shall be immediately effective and enforceable upon its entry. 
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7. 
To the extent there is inconsistency between the terms of the Engagement 
Letter, the Motion, the Sullivan Declaration, and this Order, the terms of this Order shall govern. 
8. 
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: December 2nd, 2022 
Wilmington, Delaware
CRAIG T. GOLDBLATT 
UNITED STATES BANKRUPTCY JUDGE
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