Declaration of Alyssa White in support of Customers Bank reply — In re KServicing

Record facts

U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 409 · 2023-01-05 · Docket on CourtListener

Summary

A declaration by Alyssa White, Senior Vice President of Customers Bank, filed January 5, 2023 as Doc 409 in In re Kabbage, Inc., d/b/a KServicing, et al., Chapter 11 Case No. 22-10951 (CTG), in the U.S. Bankruptcy Court for the District of Delaware. It supports Customers Bank's reply to the Debtors' objection to its motion to compel compliance with a court-approved Settlement Agreement and for additional adequate protection. The declarant quotes paragraphs 3(A) and 4(E) of the Settlement Agreement and states that KServicing remitted a partial October payment of $376,326.59 on November 17, 2022 and a November payment of $1,026,516.58. She states that a November bank statement shows $543,313.43 in deposits and transfers she describes as unauthorized. Exhibit A (a Remittance Wire Summary) and Exhibit B (the bank statement) are referenced as attached.

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IN THE UNITED STATES BANKRUPTCY COURT 
FOR THE DISTRICT OF DELAWARE 
 
 
In re: 
 
KABBAGE, INC., d/b/a KSERVICING, et al.,1 
Debtors. 
Chapter 11 
Case No. 22-10951 (CTG) 
(Jointly Administered) 
 
Re:  Docket No. 408 
 
DECLARATION OF ALYSSA WHITE IN SUPPORT OF REPLY OF CUSTOMERS 
BANK TO DEBTORS’ OBJECTION TO MOTION OF CUSTOMERS BANK FOR 
ENTRY OF AN ORDER (I) COMPELLING COMPLIANCE WITH COURT 
APPROVED SETTLEMENT AGREEMENT AND ORDER; (II) REQUIRING 
ADDITIONAL ADEQUATE PROTECTION IN FAVOR OF CUSTOMERS BANK;  
AND (III) GRANTING RELATED RELIEF 
I, Alyssa White, hereby declare pursuant to 28 U.S.C. §1746, under penalty of perjury to the 
best of my knowledge and belief, that: 
1. 
I am Senior Vice President, Director of Digital 7A Operations for Customers Bank. 
2. 
I submit this Declaration in support of the contemporaneously filed Reply of 
Customers Bank to Debtors’ Objection to Motion of Customers Bank for Entry of an Order (I) 
Compelling Compliance with Court Approved Settlement Agreement and Order; (II) Requiring 
Additional Adequate Protection in Favor of Customers Bank; and (III) Granting Related Relief 
(the “Reply”).2   
3. 
I have personal knowledge of the terms of the Settlement Agreement entered into 
between Customers Bank and the Debtor, Kabbage, Inc. d/b/a KServicing (“KServicing”), and the 
interactions between the parties relating to the Settlement Agreement thereafter, as well as the 
assertions in the Motion and the Objection.  In addition, I have personal knowledge of Customers 
Bank’s business relationship with KServicing and the records maintained by KServicing on 
Customers Bank’s behalf in the ordinary course of its business as loan servicer for the Customers 
Bank PPP Loans. 
4. 
The Settlement Agreement provides at paragraph 3(A) that after execution of the 
Agreement “through the Effective Date, the Parties shall work together in good faith to promptly 
reconcile the amounts of the Disputed KServicing Fee Holdback and the Disputed KServicing Fee 
 
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). The Debtors’ mailing and service address is 925B Peachtree Street NE, 
Suite 383, Atlanta, GA 30309. 
2 Capitalized terms not defined herein shall have the meanings ascribed in the Reply.   
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Remittance Holdback as of the Petition Date to determine the appropriate amount of the Settlement 
Payment.”  The “Effective Date” is defined in the Agreement as the date on which this Court 
approved the Agreement.  After the Settlement Agreement was approved by the Court, I 
understand that the Effective Date became set as November 9, 2022. 
5. 
Following the execution of the Settlement Agreement on October 27 2022, 
representatives of Customers Bank were in frequent communication with employees of KServicing 
in an effort to work together in good-faith to promptly reconcile the amounts of the Disputed 
KServicing Fee Holdback and the Disputed KServicing Remittance Holdback as of the Petition 
Date to determine the appropriate amount of the Settlement Payment.  I was personally involved 
in this reconciliation, on a daily basis, and frequently communicated with Donna Evans and 
Tamica Williams of KServicing, among others.   
6. 
The Settlement Agreement also provides in Paragraph 4(E) as follows:   
For the avoidance of doubt, pursuant to the Servicing Plan, beginning as of the Petition 
Date, KServicing has and shall continue to deposit any and all borrower collections 
received on or after the Petition Date into a segregated account in the name of and for the 
benefit of [Customers Bank] (separate and apart from any other funds or assets) and shall 
provide [Customers Bank]  with the account information regarding the segregated account, 
shall hold such funds in trust for the benefit of [Customers Bank], and shall promptly, but 
in any event within ten (10) Business Days of the end of each month, or such other timing 
as mutually agreed upon in writing by the Parties, transfer all such funds to [Customers 
Bank]. 
7. 
As detailed in the Reply and in prior filings with this Court, on November 17, 2022, 
KServicing initially remitted only a partial payment for the month of October in the amount of 
$376,326.59. See Letter to the Honorable Craig T. Goldblatt in Response to Docket No. 287 [Dkt. 
No. 289-1], at p. 5 (noting the shortfall in the October payment).  KServicing only corrected the 
partial payment for October on December 14, 2022 (a week after Customers Bank filed a Motion 
on the topic).   
8. 
The October short payment appears to be part of a pattern, as it now appears that 
KServicing again made only a partial payment to Customers Bank for November.  For November, 
KServicing made a payment of $1,026,516.58, of which $925,242.87 was to correct October’s 
short payment and $101,273.71 for borrower remittances collected in November.  Attached hereto 
as Exhibit A is a true and accurate copy of a Remittance Wire Summary that KServicing provided 
in connection with the November payment (made on December 14, 2022).  While the Remittance 
Wire Summary provided by KServicing provides incomplete and confusing information, the 
November Synovus bank statement makes clear that the payment was over $400,000 too low 
because that bank statement shows $543,313.43 in deposits into the account in the month of 
November.  That bank statement is attached hereto as Exhibit B.  That same bank statement makes 
clear that KServicing paid out monies to third parties in November from this account that were not 
authorized by Customers Bank and should not have been withheld from Customers Bank.  Based 
on my review of the November bank statement, KServicing has made transfers from the segregated 
account to the SBA for obligations that pre-date October 3, 2022.  Those payment obligations were 
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resolved as part of the Settlement Agreement’s reconciliation process and should not have been 
paid with borrower remittances received into the segregated account after October 3, 2022. 
 
Dated:  January 5, 2023 
/s/ Alyssa White_______________ 
Alyssa White 
 
Case 22-10951-CTG    Doc 409    Filed 01/05/23    Page 3 of 3

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