Motion to seal — debtors (Williams and Evans declaration exhibits) — In re KServicing

Record facts

U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 351 · 2022-12-09 · Docket on CourtListener

Summary

The debtors' motion for an order authorizing them to file under seal certain exhibits to the declarations supporting their motion to enforce, filed December 9, 2022 as Doc 351 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 motion concerns Exhibits 2, 3, and 4 to the Williams Declaration and Exhibit 7 to the Evans Declaration, filed in support of the debtors' motion to enforce the Settlement Order and Settlement Agreement with Customers Bank. It states those exhibits contain bank account information of the Company and Customers Bank and personal information about PPP borrowers. It relies on 11 U.S.C. § 107(b)(1), 11 U.S.C. § 107(c)(1)(A) and Local Rule 9018-1(d), and sets a hearing for January 6, 2023.

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Full text

RLF1 28328895v.1 
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) 
: 
 
: 
: 
: 
(Jointly Administered)  
Hearing Date: January 6, 2023 at 10:00 a.m. (ET)
 
Debtors.1 
: 
: 
Obj. Deadline: December 23, 2022 at 4:00 p.m. 
(ET) 
------------------------------------------------------------ x 
Re: Docket Nos. 340, 341, 342, 343 & 344 
DEBTORS’ MOTION FOR ENTRY OF AN ORDER  
AUTHORIZING THE DEBTORS TO FILE UNDER SEAL CERTAIN  
EXHIBITS TO THE DECLARATIONS IN SUPPORT OF MOTION TO ENFORCE 
Kabbage, Inc. d/b/a KServicing (the “Company”) 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 sections 105 and 107 of 
title 11 of the United States Code (the “Bankruptcy Code”), Rule 9018 of the Federal Rules of 
Bankruptcy Procedure (the “Bankruptcy Rules”), and Rule 9018-1 of the Local Rules of 
Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of 
Delaware (the “Local Rules”), entry of an order authorizing the Debtors to file under seal the 
Confidential Information (as defined below) contained in certain of the exhibits (the “Exhibits”) 
 
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 351    Filed 12/09/22    Page 1 of 8

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attached to (i) the Declaration of Tamica M. Williams in Support of Motion of Debtors for Entry 
of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing 
and Customers Bank [Docket No. 341] (the “Williams Declaration”) and (ii) the Declaration of 
Donna R. Evans in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement 
Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 342] 
(the “Evans Declaration” and together with the Williams Declaration, the “Declarations”), 
which were filed under seal. 
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 Local Rule 9013-1(f), 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 
A. 
General Background 
4. 
On October 3, 2022 (the “Petition Date”), the Debtors each commenced 
with this Court a voluntary case under chapter 11 of the Bankruptcy Code (collectively, the 
“Chapter 11 Cases”).  The Debtors are authorized to continue to operate their business as debtors 
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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. 
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]. 
B. 
Specific Background 
7. 
On October 27, 2022, the Debtors filed the Debtors’ Motion for Entry of an 
Order (I) Authorizing and Approving the Settlement Agreement Between KServicing and 
Customers Bank and (II) Granting Related Relief [Docket No. 172] (the “9019 Motion”), seeking 
approval of a settlement agreement (the “Settlement Agreement”) between the Company and 
Customers Bank (“CB”).  
8. 
On November 9, 2022, the Court entered an order approving the relief 
requested in the 9019 Motion [Docket No. 232] (the “Settlement Order”).   
9. 
On December 7, 2022, the Debtors filed the Motion of Debtors for Entry of 
an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and 
Customers Bank [Docket No. 340] (the “Motion to Enforce”), seeking to, among other things, 
enforce the Settlement Order and the Settlement Agreement.  In addition, the Debtors filed the 
Declarations in support of the Motion to Enforce.    
10. 
Exhibits 2, 3, and 4 to the Williams Declaration and Exhibit 7 to the Evans 
Declaration contain commercial information, including the Company’s and CB’s bank account 
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information, and personally identifiable information related to certain of the Debtors’ borrowers 
(the “Borrowers,” and the sensitive information discussed in this paragraph, the “Confidential 
Information”).  As a result, the Debtors have filed this Motion seeking authority to (i) file the 
Confidential Information under seal and (ii) file versions of the Declarations redacting the 
Confidential Information contained in the Exhibits.   
Basis for Relief 
11. 
Sections 105(a) and 107 of the Bankruptcy Code allow the Court to 
authorize parties to file confidential information under seal.  Pursuant to section 105(a) of the 
Bankruptcy Code, bankruptcy courts have the inherent equitable power to “issue any order, 
process, or judgment that is necessary or appropriate to carry out the provisions of this title.”  11 
U.S.C. § 105(a).   
12. 
Section 107(b)(1) provides bankruptcy courts with the power to protect 
parties in interest from potentially harmful disclosures: 
On request of a party in interest, the bankruptcy court shall, and on 
the bankruptcy court’s own motion, the bankruptcy court may— 
 
(1) protect an entity with respect to a trade secret or confidential 
research, development, or commercial information . . . .  
11 U.S.C. § 107(b)(1). 
13. 
In addition, section 107(c)(1)(A) provides bankruptcy courts with the power 
to protect individuals from potentially harmful disclosures: 
The bankruptcy court, for cause, may protect an individual, with 
respect to the following types of information to the extent the court 
finds that disclosure of such information would create undue risk of 
identity theft or other unlawful injury to the individual or the 
individual’s property:  
 
(A) Any means of identification (as defined in section 1028(d) of 
title 18) contained in a paper filed, or to be filed, in a case under this 
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title.  
11 U.S.C. § 107(c)(1)(A). 
14. 
Further, Local Rule 9018-1(d) provides, in relevant part, that “[a]ny party 
who seeks to file documents under seal must file a motion to that effect.”  Del. Bankr. L.R. 9018-
1(d). 
15. 
Once the court determines that a party in interest is seeking protection of 
information that falls within one of the categories enumerated in section 107(b) of the Bankruptcy 
Code, “the court is required to protect a requesting interested party and has no discretion to deny 
the application.”  Video Software Dealers Ass’n v. Orion Pictures Corp. (In re Orion Pictures 
Corp.), 21 F.3d 24, 27 (2d Cir. 1994).  Courts have held that protection under section 107(b) must 
be granted if the information sought to be protected is commercial information, and significantly, 
that commercial information need not rise to the level of a trade secret to be entitled to protection.  
Id. at 28 (finding that the use of the disjunctive in section 107(b)(1) “neither equates ‘trade secret’ 
with ‘commercial information’ nor requires the latter to reflect the same level of confidentiality as 
the former”).  Furthermore, in contrast with Rule 26(c) of the Federal Rules of Civil Procedure, 
section 107(b) of the Bankruptcy Code does not require an entity seeking such protection to 
demonstrate “good cause.”  Orion Pictures Corp., 21 F.3d at 28.  Nor does such require a finding 
of “extraordinary circumstances or compelling need.” Id. at 27. 
16. 
Rather, a party seeking the protection of section 107(b) need only 
demonstrate that the information is “confidential” and “commercial” in nature.  Id. at 27; see also 
In re Global Crossing Ltd., 295 B.R. 720, 725 (Bankr. S.D.N.Y. 2003) (recognizing that the 
purpose of Bankruptcy Rule 9018 is to “protect business entities from disclosure of information 
that could reasonably be expected to cause the entity commercial injury”).  Once established that 
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RLF1 28328895v.1 
the subject information qualifies as “commercial information” under section 107(b)(1), the 
Bankruptcy Code mandates that this information be protected from disclosure.  See Global 
Crossing Ltd., 295 B.R. at 725. 
17. 
The Debtors submit that sufficient cause exists for the Court to grant the 
relief requested herein.  As set forth above, certain of the Exhibits contain the bank account 
information of both the Company and CB and the disclosure of such account information may 
adversely affect the Debtors and/or CB.  Accordingly, the Debtors submit such Confidential 
Information falls within the scope of “confidential information” that must be protected pursuant to 
section 107(b)(1). 
18. 
In addition, certain Exhibits contain personal information related to PPP 
loans serviced by the Debtors, including the names of Borrowers and the status of the Borrowers’ 
loans.  The Debtors believe that disclosure of such information could cause unnecessary harm to 
the individual Borrowers.   
19. 
In light of the foregoing, the Debtors submit that the Confidential 
Information falls within the scope of “confidential”, “commercial” and “personal” information that 
must be protected pursuant to section 107 of the Bankruptcy Code.  Accordingly, the Debtors 
respectfully request that the Court authorize the Debtors to (i) file the Confidential Information 
under seal and (ii) file versions of the Declarations redacting the Confidential Information 
contained in the Exhibits.  
Compliance with Local Rule 9018-1(d) 
20. 
To the best of the knowledge, information, and belief of the undersigned 
counsel to the Debtors, the Confidential Information that the Debtors are requesting to seal 
pursuant to the relief requested in this Motion (other than the Debtors’ bank account information) 
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contains information subject to the Confidentiality Rights of another Holder of Confidentiality 
Rights (each as defined in Local Rule 9018-1(d)(iii)).  Prior to filing this Motion, counsel to the 
Debtors contacted counsel to CB regarding the relief requested herein and understands that CB 
does not oppose the requested relief. 
21. 
Due to the large number of Borrowers whose Confidential Information may 
be included in the Exhibits, the Debtors believe it is futile and/or impractical for them to confer 
with such Borrowers regarding the relief requested herein prior to the filing of this Motion.  
Notice 
22. 
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) CB; (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 has requested notice pursuant to Bankruptcy Rule 2002.  The Debtors believe that no further 
notice is required. 
 
[Remainder of page intentionally left blank] 
 
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WHEREFORE, the Debtors request that the Court enter the Proposed Order, substantially 
in the form attached hereto as Exhibit A, granting the relief requested in the Motion and such other 
and further relief as may be just and proper. 
 
Dated: December 9, 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 
 
Case 22-10951-CTG    Doc 351    Filed 12/09/22    Page 8 of 8

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