Court filing
Interim Fee Application — In re KServicing
Record facts
| Court | U.S. Bankruptcy Court for the District of Delaware |
|---|---|
| Filed | 2023-02-14 |
U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 532 · 2023-02-14 · Docket on CourtListener
Summary
The first interim fee application of AlixPartners, LLP, financial advisor to the Chapter 11 debtors, in In re Kabbage, Inc. d/b/a KServicing, Case No. 22-10951 (CTG), in the U.S. Bankruptcy Court for the District of Delaware, filed February 14, 2023 as Doc 532. It seeks allowance of $1,955,331.75 in compensation and $10,120.46 in expenses for October 3, 2022 through December 31, 2022, and payment of the $876,775.92 outstanding after $1,080,344.60 in fees and $8,331.69 in expenses paid. The application reports 2,573.8 hours at a blended rate of $759.71 and lists fees by professional and matter category. It cites sections 330 and 331 of the Bankruptcy Code and Rule 2016 of the Federal Rules of Bankruptcy Procedure, and reports a retainer of $476,344.64 and a holdback of $391,066.35. A hearing is set for March 22, 2023 with an objection deadline of March 6, 2023.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
1
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)
Hearing Date: March 22, 2023 at 10:00 a.m. (ET)
Objection Deadline: March 6, 2023 at 4:00 p.m. (ET)
FIRST INTERIM APPLICATION OF ALIXPARTNERS, LLP,
FINANCIAL ADVISOR TO THE CHAPTER 11 DEBTORS,
FOR ALLOWANCE OF COMPENSATION FOR PROFESSIONAL
SERVICES RENDERED AND REIMBURSEMENT OF EXPENSES INCURRED
FOR THE PERIOD FROM OCTOBER 3, 2022 THROUGH DECEMBER 31, 2022
Name of Applicant:
ALIXPARTNERS, LLP
Authorized to provide professional services to:
The Chapter 11 Debtors
Date of Retention:
October 21, 2022 effective as of October 3, 2022
[Docket No. 135]
Period for which compensation and
reimbursement is sought:
Beginning of Period
End of Period
October 3, 2022
December 31, 2022
Summary of Total Fees and Expenses Requested During the First Interim Period
Amount of compensation sought as actual,
reasonable and necessary:
$1,955,331.75
Amount of expense reimbursement sought as
actual, reasonable and necessary:
$10,120.46
Blended Hourly Rate:
$759.71
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 532 Filed 02/14/23 Page 1 of 15
2
Summary of Prior Payments and Outstanding Amounts
Due to AlixPartners During the First Interim Period:
Total allowed fees paid to AlixPartners during
the First Interim Period:
$1,080,344.60
Total allowed expenses paid to AlixPartners
during the First Interim Period:
$8,331.69
Total amount of fees and expenses due and
owing to AlixPartners during the First Interim
Period:
$876,775.92
The total time expended for fee application preparation is 48.6 hours and the
corresponding compensation requested is $27,204.50.
This is a(n): Monthly Application X Interim Application ___ Final Application
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 2 of 15
3
ALIXPARTNERS, LLP
SUMMARY OF MONTHLY FEE APPLICATIONS
DURING THE FIRST INTERIM PERIOD
______________________
1 Pending objection deadline of February 20, 2023 at 4:00 p.m. (prevailing Eastern Time) for the Third Monthly
Application of AlixPartners, LLP, Financial Advisor to the Chapter 11 Debtors, for Allowance of Compensation for
Professional Services Rendered and Reimbursement of Expenses Incurred for the Period from December 1, 2022
through December 31, 2022.
Requested
Paid
Fees
Expenses
Fees
Expenses
12/02/2022
Docket #323
10/03/2022 -
10/31/2022
731,257.25
$
5,925.18
$
585,005.80
$
5,925.18
$
12/27/2022
Docket #374
$ 146,251.45
12/29/2022
Docket #391
11/1/2022 -
11/30/2022
619,173.50
$
2,406.51
$
495,338.80
$
2,406.51
$
1/20/2023
Docket #475
$ 123,834.70
01/30/2022
Docket #4961
12/1/2022 -
12/31/2022
604,901.00
$
1,788.77
$
-
$
-
$
$ 606,689.77
1,955,331.75
$
10,120.46
$
1,080,344.60
$
8,331.69
$
$ 876,775.92
Total
Date Filed;
Docket No.
Period
Certificate of
No Objection
Amount
Outstanding
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 3 of 15
4
ALIXPARTNERS, LLP
SUMMARY OF HOURS AND FEES BY PROFESSIONAL
DURING THE FIRST INTERIM PERIOD
Professional
Title
Rate
Hours
Fees
Eric Koza
Managing Director
$1,335
2.3
3,070.50
Deborah Rieger-Paganis
Managing Director
$1,160
214.6
248,936.00
James Nelson
Director
$945
424.2
400,869.00
Thora B Thoroddsen
Director
$880
416.6
366,608.00
Elizabeth S Kardos
Director
$750
2.7
2,025.00
John M Katsigeorgis
Senior Vice President
$795
482.2
383,349.00
Laura Capen Verry
Senior Vice President
$530
7.6
4,028.00
Kaitlyn A Sundt
Senior Vice President
$550
0.3
165.00
Heather E Saydah
Senior Vice President
$510
3.0
1,530.00
Anthony Perrella
Vice President
$555
437.5
242,812.50
Nicholas LoBiondo
Vice President
$555
551.1
305,860.50
Brooke Filler
Vice President
$485
1.7
824.50
Lisa Marie Bonito
Vice President
$475
30.0
14,250.00
2,573.8
$ 1,974,328.00
(18,996.25)
$ 1,955,331.75
$ 759.71
Total Hours and Fees for Professionals
Less: 50% Travel Fees
Total Fees for Professionals
Average Billing Rate
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 4 of 15
5
ALIXPARTNERS, LLP
SUMMARY OF HOURS AND FEES BY MATTER CATEGORY
DURING THE FIRST INTERIM PERIOD
Code
Matter Category
Hours
Fees
1.1
Chapter 11 Process / Case Management
148.3 $ 130,240.50
1.3
Cash / Liquidity Matters
879.1 641,299.50
1.4
Communication & Meetings with Interested Parties
32.4 30,307.50
1.5
U.S. Trustee / Court Reporting Requirements
854.7 626,210.50
1.6
CFO Support
8.4 7,730.00
1.9
Plan & Disclosure Statement
335.5 275,517.00
1.10
Transaction Support
13.7 9,343.50
1.13
Vendor Management
48.0 40,653.50
1.14
Executory Contracts
22.2 18,860.00
1.15
Claims Process / Avoidance Actions
61.6 52,791.50
1.16
Adversary Proceedings & Contested Matters
30.2 27,785.00
1.17
Preparation & Attend Court Hearing
40.9 41,572.50
1.19
Retention Applications & Relationship Disclosures
10.7 6,820.00
1.20
Fee Statements & Fee Applications
48.6 27,204.50
1.31
Travel Time
39.5 18,996.25
Total Hours and Fees By Matter Category
2,573.8 $ 1,955,331.75
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 5 of 15
6
ALIXPARTNERS, LLP
SUMMARY OF EXPENSES
DURING THE FIRST INTERIM PERIOD
Expense Category
Amount
Airfare
$ 2,637.33
Ground Transportation
2,007.74
Lodging
4,478.16
Meals
610.33
Parking & Tolls
247.00
Phone & Internet
99.90
Supplies
40.00
Total Expenses
$ 10,120.46
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 6 of 15
1
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)
Hearing Date: March 22, 2023 at 10:00 a.m. (ET)
Objection Deadline: March 6, 2023 at 4:00 p.m. (ET)
FIRST INTERIM APPLICATION OF ALIXPARTNERS, LLP,
FINANCIAL ADVISOR TO THE CHAPTER 11 DEBTORS,
FOR ALLOWANCE OF COMPENSATION FOR PROFESSIONAL
SERVICES RENDERED AND REIMBURSEMENT OF EXPENSES INCURRED
FOR THE PERIOD FROM OCTOBER 3, 2022 THROUGH DECEMBER 31, 2022
AlixPartners, LLP (“AlixPartners”), as financial advisor to the above-captioned debtors ( the
“Debtors”), hereby submits its first interim application (the “Application”) for allowance of
compensation for professional services rendered and reimbursement of out-of-pocket expenses
incurred for the period from October 3, 2022 through December 31, 2022 (the “First Interim Period”).
AlixPartners respectfully states as follows:
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 532 Filed 02/14/23 Page 7 of 15
2
Jurisdiction and Venue
1.
The United States Bankruptcy Court for the Delaware (the “Court”) has jurisdiction
over this matter pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding pursuant to 28
U.S.C. § 157(b)(2).
2.
Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.
Basis for Relief
3.
The bases for the relief requested herein are Sections 330 and 331 of Title 11 of the
United States Bankruptcy Code (the “Bankruptcy Code”), Rule 2016 of the Federal Rules of
Bankruptcy Procedure (the “Bankruptcy Rules”), Rule 2016-2 of the Local Bankruptcy Rules for the
District of Delaware (the “Local Rules”), the United States Trustee Guidelines for Reviewing
Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. § 330, adopted
June 11, 2013 (the “U.S. Trustee Guidelines”) and the Order Establishing Procedures for Interim
Compensation and Reimbursement of Expenses of Professionals [Docket No. 136] (the “Interim
Compensation Order”).
Background
4.
On October 3, 2022 (the “Petition Date”), the Debtors each filed a voluntary petition
for relief under chapter 11 of the Bankruptcy Code, thereby commencing the above-captioned Chapter
11 Cases (the “Chapter 11 Cases”) in this Court.
5.
No trustee or examiner has been appointed in these Chapter 11 Cases.
AlixPartners’ Retention
6.
On October 4, 2022, the Debtors filed their Application of Debtors for Entry of Order
Authorizing Employment and Retention of AlixPartners, LLP as Financial Advisor to the Debtors
Effective as of the Petition Date [Docket No. 16].
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 8 of 15
3
7.
On October 21, 2022, the Court entered the Order Authorizing Debtors to Employ and
Retain AlixPartners, LLP as Financial Advisor Effective as of the Petition Date [Docket No. 135] (the
“Retention Order”).
8.
AlixPartners is currently holding a retainer in the amount of $476,344.64 (the
“Retainer”). Pursuant to the Retention Order, the Retainer shall be treated as an evergreen retainer
and held by AlixPartners as security throughout these Chapter 11 Cases until AlixPartners’ fees and
expenses are fully paid.
9.
The Retention Order approved the terms of AlixPartners’ hourly fee and expense
structure set forth in the engagement letter dated April 25, 2022 (the “Engagement Letter”) and
authorized AlixPartners to be compensated and reimbursed pursuant to section 327 of the Bankruptcy
Code in accordance with the terms of the Engagement Letter, subject to the procedures set forth in the
Bankruptcy Code, Bankruptcy Rules, Local Rules, U.S. Trustee Guidelines and the Interim
Compensation Order, and any other applicable orders of this Court.
10.
Pursuant to the Engagement Letter, Deborah Rieger-Paganis is the managing director
responsible for this engagement, assisted by a staff of consultants at various levels with a wide range
of relevant skills and abilities.
Monthly Fee Applications During the First Interim Period
11.
AlixPartners filed and served three (3) monthly fee applications (the “Monthly Fee
Applications”) during the First Interim Period pursuant to the Interim Compensation Order. The
Monthly Fee Applications contain detailed descriptions of the services rendered in the amount of
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 9 of 15
4
$1,955,331.752 and out-of-pocket expenses incurred in the amount of $10,120.46 and are noted below:
12.
Detailed descriptions of the services performed by each professional, organized by
matter category and by date, the aggregate hours of services provided (in tenths of an hour), and a
detailed list of the out-of-pocket expenses incurred during the First Interim Period are attached to the
Monthly Fee Applications.
13.
AlixPartners received payments from the Debtors in the amount of $1,080,344.60 for
services rendered and $8,331.69 for out-of-pocket expenses incurred during the Final Period. The
total amount of $876,775.92 remains outstanding as of the filing of this Application.
Summary of Services Rendered During the First Interim Period
14.
During the First Interim Period, AlixPartners has advised the Debtors on and assisted
the Debtors with (i) liquidity forecasting, cash management, and cash collateral compliance/reporting;
(ii) communications and/or negotiations with stakeholders and their representatives; (iii)
implementation of the accounts payable and liability segregation controls; (iv) preparation of the
Statement of Financial Affairs, Schedules of Assets and Liabilities, Monthly Operating Reports and
2 This amount includes the 20% holdback of fees reflected in the Monthly Fee Applications, including $146,251.45 for
the First Monthly Fee Application, $123,834.70 for the Second Monthly Fee Application, $120,980.20 for the Third
Monthly Fee Application, for a total holdback of $391,066.35 (the “Holdback”).
3 Pending objection deadline of February 20, 2023 at 4:00 p.m. (prevailing Eastern Time) for the Third Monthly
Application of AlixPartners, LLP, Financial Advisor to the Chapter 11 Debtors, for Allowance of Compensation for
Professional Services Rendered and Reimbursement of Expenses Incurred for the Period from December 1, 2022 through
December 31, 2022.
Requested
Paid
Fees
Expenses
Fees
Expenses
12/02/2022
Docket #323
10/03/2022 -
10/31/2022
731,257.25
$
5,925.18
$
585,005.80
$
5,925.18
$
12/27/2022
Docket #374
$ 146,251.45
12/29/2022
Docket #391
11/1/2022 -
11/30/2022
619,173.50
$
2,406.51
$
495,338.80
$
2,406.51
$
1/20/2023
Docket #475
$ 123,834.70
01/30/2022
Docket #4963
12/1/2022 -
12/31/2022
604,901.00
$
1,788.77
$
-
$
-
$
$ 606,689.77
1,955,331.75
$
10,120.46
$
1,080,344.60
$
8,331.69
$
$ 876,775.92
Total
Date Filed;
Docket No.
Period
Certificate of
No Objection
Amount
Outstanding
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 10 of 15
5
other regular reports required by the Court; (v) development of the winddown budget scenarios; (vi)
review of monthly financial statements; (vii) preparation of a liquidation analysis for the plan of
reorganization; (viii) coordination and responses to extensive diligence requests from creditors and
other interested parties; (ix) development of a servicing cost-per-loan analysis; (x) identification and
review of executory contracts; (xi) claims management; and (xii) attendance at Board meetings to
present analysis and coordinate on case priorities.
Summary of Services by Category During the First Interim Period
15.
AlixPartners classified the services performed into separate categories. The descriptions
below summarize the services provided by AlixPartners to the Debtors during the First Interim Period.
Matter Code 1.1: Chapter 11 Process/Case Management
148.3 hours - $130,240.50
This category includes: (i) organizing and managing the Debtors’ resources to effectively
and efficiently plan, coordinate and manage the Chapter 11 process; (ii) reviewing and
maintaining dockets and case calendars; and (iii) holding working sessions to keep the
engagement team informed of the latest case developments, remain aligned on the many
workstreams, verify that resources are properly allocated to meet deadlines, and ensure all
matters and issues are addressed in an efficient and timely manner.
Matter Code 1.3: Cash/Liquidity Matters
879.1 hours - $641,299.50
This category includes: (i) maintaining a rolling weekly cash forecasting model; (ii)
preparing daily cash balance reporting; (iii) analyzing actual weekly cash receipts and
disbursements; (iv) negotiating required reporting format and content for the cash collateral
order; (v) reconciling loan-related receipts to determine Debtors’ portion; (vi) advising
management on complying with post-petition cash management and cash reporting
requirements as defined in the cash management and cash collateral orders; (vii) assisting
management with reviewing disbursements; and (viii) assisting management with
information requests related to liquidity, cash reporting, and cash forecasting.
Matter Code 1.4: Communication & Meetings with Interested Parties
32.4 hours - $30,307.50
This category includes meeting with, preparing reports for, and communications with,
various other Debtor professionals, lenders and/or their advisors, the United States Trustee,
and other parties in interest.
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 11 of 15
6
Matter Code 1.5: U.S. Trustee/Court Reporting Requirements
854.7 hours - $626,210.50
This category includes: (i) preparing the Statement of Financial Affairs and the Schedules
of Assets and Liabilities; (ii) reviewing and analyzing supporting documentation for the
Statement of Financial Affairs and the Schedules of Assets and Liabilities; (iii) holding
working sessions with management and other advisors to keep the remain aligned on the
bankruptcy process workstreams and verify that resources are properly allocated to meet
deadlines; (iv) designing and maintaining schedules to track payments authorized under
the various “first day” and “second day” orders; (v) assisting in preparation of reporting
requirements for Initial Debtor Interview; (vi) assisting management in preparation for 341
meeting of creditors; (vii) reviewing bankruptcy court filings and coordinating analysis as
needed; (viii) attending Board meetings to present analysis and coordinate on case
priorities; and (ix) assisting management with adherance to the requirements of the Court,
the U.S. Trustee, and/or the Bankruptcy Code.
Matter Code 1.6: CFO Support
8.4 hours - $7,730.00
This category includes reviewing monthly financial statements and preparing updates to
the professional fees forecast.
Matter Code 1.9: Plan & Disclosure Statement
335.5 hours - $275,517.00
This category includes: (i) developing the hypothetical liquidation analysis model for best-
interest test; (ii) preparing liquidation analysis exhibits for the disclosure statement; (iii)
analyzing the value waterfall to various creditor classes under the proposed plan of
reorganization; (iv) preparing the cost-per-loan analysis; and (v) providing edits to the plan
and disclosure statement based on stakeholder comments.
Matter Code 1.10: Transaction Support
13.7 hours - $9,343.50
This category includes assisting the Debtors with various transaction and closing-related
tasks, including researching and responding to inquiries and information requests from
parties in interest, coordinating and managing closing mechanics, and preparing and
managing the emergence day funds flow.
Matter Code 1.13: Vendor Management
48.0 hours - $40,653.50
This category includes assisting the Debtors with vendor management, including
performing claims analyses, communicating with vendors, negotiating payment terms, and
developing and customizing numerous vendor payment proposals.
Matter Code 1.16: Adversary Proceedings & Contested Matters
30.2 hours - $27,785.00
This category includes preparing reports and analyses and attending meetings related to
adversary proceedings and other contested matters.
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 12 of 15
7
Matter Code 1.17: Preparation & Attend Court Hearing
40.9 hours - $41,572.50
This category includes preparing for and attending Court hearings in person, by video
conference, or telephonically.
Matter Code 1.19: Retention Application & Relationship Disclosures
10.7 hours - $6,820.00
This category includes: (i) drafting AlixPartners’ retention application, proposed orders
and declarations, including analyzing and drafting relationship disclosures required by the
Bankruptcy Code; (ii) communications regarding AlixPartners’ retention; and (iii)
responding to inquiries from the U.S. Trustee.
Matter Code 1.20: Fee Statements & Fee Applications
48.6 hours - $27,204.50
This category includes managing the fee application process, and preparing and reviewing
monthly fee applications, including all required supporting documentation, in accordance
with requirements of the U.S. Trustee and/or the Court.
Matter Code 1:31: Travel Time
39.5 hours - $18,996.25
This category includes traveling to meetings outside of consultants’ respective “home”
office region. Hours billed under this category were billed at 50% of AlixPartners’
standard rates.
16.
AlixPartners believes that the professional fees and out-of-pocket expenses requested are
reasonable, actual and for necessary services rendered or expenses incurred on behalf of the Debtors
during the First Interim Period.
17.
AlixPartners has not entered into any agreement, express or implied, with any other party
for the purpose of fixing or sharing fees or other compensation to be paid for professional services
rendered in these Chapter 11 Cases. No promises have been received by AlixPartners or any member
thereof as to compensation in connection with these Chapter 11 Cases other than in accordance with
the provisions of the Bankruptcy Code.
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 13 of 15
8
Certification
18.
A Certification of Deborah Rieger-Paganis is attached hereto as Exhibit A and
incorporated herein.
No Prior Request
19.
No prior request for the relief sought in this Application has been made to this or any
other Court. This Application is made without prejudice to further or final applications based upon
all relevant criteria, including the results achieved in the case as a whole.
Notice
20.
Notice of the Application has been or will be provided to those parties entitled to receive
notice hereof in accordance with any applicable order of this Court.
[Remainder of page intentionally left blank.]
Case 22-10951-CTG Doc 532 Filed 02/14/23 Page 14 of 15
9
Conclusion
WHEREFORE, AlixPartners, as financial advisor to the Debtors, respectfully requests that
the Court enter an order providing: (i) an interim allowance in the amount of $1,955,331.75 (including
the Holdback in the amount of $391,066.35) as compensation for professional services rendered and
reimbursement of out-of-pocket expenses incurred in the amount of $10,120.46 for the First Interim
Period; (ii) that the Debtors are authorized and directed to pay AlixPartners the remaining outstanding
balance of $876,775.92; and (iii) such other and further relief as this Court deems proper.
Dated: February 14, 2023
ALIXPARTNERS, LLP
909 Third Avenue, 28th Floor
New York, New York 10022
/s/ Deborah Rieger-Paganis
By: Deborah Rieger-Paganis
Partner & Managing Director
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