Court filing
First Interim Fee Application of Jones Day as Special Counsel — 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. 534 · 2023-02-14 · Docket on CourtListener
Summary
The summary of the First Interim Application of Jones Day as special counsel to the debtors in In re Kabbage, Inc. d/b/a KServicing et al., Case No. 22-10951 (CTG), in the U.S. Bankruptcy Court for the District of Delaware, filed February 14, 2023 as Doc 534. It seeks $188,987.50 in compensation and $153,582.18 in expenses for October 3, 2022 through December 31, 2022, including $147,803.75 in consultant fees. Tables break down 223.30 hours by professional, blended rates, and project categories such as Department of Justice Investigations, Congressional Investigation and Federal Trade Commission Investigation, against a budget of $225,000.00. A certification of partner Daniel J. Merrett reports the prepetition fee advance, a voluntary reduction of $22,190.00 in fees, and answers to the U.S. Trustee Guidelines questions. The filing is 10 pages.
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Full text
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)
:
:
(Jointly Administered)
Debtors.1
:
:
Obj. Deadline: March 6, 2023 at 4:00 p.m. (ET)
:
Hearing Date: March 22, 2023 at 10:00 a.m. (ET)
------------------------------------------------------------ x
SUMMARY OF FIRST INTERIM APPLICATION OF JONES DAY FOR
ALLOWANCE OF COMPENSATION FOR SERVICES RENDERED AND FOR
REIMBURSEMENT OF EXPENSES AS SPECIAL COUNSEL TO THE DEBTORS
FOR THE PERIOD FROM OCTOBER 3, 2022 THROUGH DECEMBER 31, 2022
Name of Applicant:
Jones Day
Authorized to Provide Professional Services to:
Debtors and Debtors-in-Possession
Date of Retention:
November 2, 2022, effective as of October
3, 2022
Period for which compensation and
reimbursement are sought:
October 3, 2022 through December 31, 2022
Amount of Compensation sought as actual,
reasonable, and necessary:
$188,987.50
Amount of Expense Reimbursement sought as
actual, reasonable, and necessary:
$153,582.18
Total Compensation Approved by Interim
Order to Date:
N/A
Total Expenses Approved by Interim
Order to Date:
N/A
Total Allowed Compensation Paid to Date:
N/A
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 534 Filed 02/14/23 Page 1 of 10
-2-
Total Allowed Expenses Paid to Date:
N/A
Blended Hourly Rate in this Application
for All Attorneys:
$880.70
Blended Hourly Rate in this Application
for All Timekeepers:
$846.34
Compensation Already Paid Pursuant to a
Monthly Compensation Order But Not Yet
Allowed:
$136,836.00
Expenses Already Paid Pursuant to a Monthly
Compensation Order But Not Yet Allowed:
$146,488.43
Number of Professionals Included in this
Application:
16
If applicable, number of professionals in this
application not included in staffing plan
approved by client:
1
If applicable, difference between fees budgeted
and compensation sought for this period:
($36,012.50)
Number of Professionals Billing Fewer
Than 15 Hours:
12
Are any rates higher than those approved or
disclosed at retention?
No
This is a(n): monthly X interim final application
Prior Monthly Fee Applications Filed:
Date / Docket
Month Covered
Fees
Expenses2
December 2, 2022
[Dkt. 325]
October 3 – 31, 2022
$106,952.50
$80,446.40
January 3, 2023
[Dkt. 400]
November 1 – 30, 2022
$64,092.5
$66,042.03
January 30, 2023
[Dkt. 498]
December 1 – 31, 2022
$17,942.50
$7,093.75
To date, no objections have been received to any prior monthly fee applications.3
2
Includes Expenses paid in the amount of $147,803.75 for services provided by Forensic Risk Alliance, Inc.
(“FRA”), Jones Day’s consultant with respect to the Federal Investigations. Consistent with the
requirements of Local Rule 2016-2, copies of FRA’s invoice were attached as Exhibit C to the prior
monthly fee applications.
3
The objection deadline relating to the Third Monthly Fee Application of Jones Day, Special Counsel to the
Debtors, for Allowance of Compensation for Services Rendered and for Reimbursement of Expenses for the
Period from December 1, 2022 through December 31, 2022 has not yet passed.
Case 22-10951-CTG Doc 534 Filed 02/14/23 Page 2 of 10
-3-
SUMMARY OF HOURS AND COMPENSATION BY PROFESSIONAL
Name of
Professional
Individual
Position/Group*/Bar Year
Hourly
Billing Rate
(including
changes)
Total
Hours
Billed
Total
Compensation
Y W Chan
Partner/B&TL/2007
$1,200
0.50
$600.00
J B Ellman
Partner/BR&R/1991
$1,300
0.20
$260.00
J M Hall
Partner/IWC/2003
$1,075
6.40
$6,880.00
F A Lavallee
Partner/GR/1988
$1,250
1.80
$2,250.00
A E Lelling
Partner/IWC/1994
$1,275
43.60
$55,590.00
D J Merrett
Partner/BR&R/2007
$1,100
43.40
$47,740.00
S P Parrinello
Partner/Tax/2007
$1,225
0.70
$857.50
S J Kenny
Associate/GR/2013
$950
1.10
$1,045.00
S E Morgado
Associate/B&TL/2020
$550
3.80
$2,090.00
A Nazarenko
Associate/Tax/2016
$825
1.10
$907.50
S Nosco
Associate/NLG/2022
$525
6.10
$3,202.50
I Perez
Associate/BR&R/2016
$725
1.60
$1,160.00
B N Wilhelm
Associate/B&TL/2017
$625
71.50
$44,687.50
L Fischer
Staff Attorney/BR&R/1995
$600
25.50
$15,300.00
C L Smith
Paralegal/BR&R
$425
10.90
$4,632.50
D A Doell
Project Manager
$350
5.10
$1,785.00
TOTAL
223.30
$188,987.50
* B&TL – Business & Tort Litigation; BR&R – Business Restructuring & Reorganization;
GR – Government Regulation; IWC – Investigations & White Collar Defense; NLG – New
Lawyers Group
Case 22-10951-CTG Doc 534 Filed 02/14/23 Page 3 of 10
-4-
BLENDED RATE OF PROFESSIONALS – TOTAL
Professionals
Blended Rate
Total Hours
Total Compensation
Partners & Counsel
$1,181.96
96.60
$114,177.50
Associates
$623.15
85.20
$53,092.50
Staff Attorneys
$600.00
25.50
$15,300.00
Paralegals
$425.00
10.90
$4,632.50
Project Managers
$350.00
5.10
$1,785.00
TOTAL
$846.34
223.30
$188,987.50
BLENDED HOURLY RATE FOR DOMESTIC OFFICES
CONTRIBUTING 10% OR MORE OF BILLED HOURS
Office/Category of Professional
Blended Rate
Atlanta – Partner/Of Counsel
$920
Atlanta – Associate
$538
Atlanta – Staff Attorney
$376
Atlanta – Paralegal
$346
Atlanta – Project Manager
$387
Boston – Partner
$1,013
Boston – Associate
$546
Boston – Staff Attorney
N/A
Boston – Paralegal
$249
Boston – Project Manager
N/A
Cleveland – Partner
$906
Cleveland – Associate
$499
Cleveland – Staff Attorney
$452
Cleveland – Paralegal
$326
Cleveland – Project Manager
N/A
Case 22-10951-CTG Doc 534 Filed 02/14/23 Page 4 of 10
-5-
COMPENSATION BY PROJECT CATEGORY
Project Category
Total Hours
Total Fees
Case Administration
4.80
$3,795.00
Creditor Inquiries
0.00
$0.00
Executory Contracts/Unexpired Leases
0.00
$0.00
Automatic Stay/Adequate Protection
0.00
$0.00
Plan of Reorganization/Disclosure Statement
0.00
$0.00
Use, Sale or Lease of Assets
0.00
$0.00
Financing matters
0.00
$0.00
Claims Administration
0.00
$0.00
Court Hearings
0.00
$0.00
General Corporate
0.00
$0.00
Schedules/SOFA/U.S. Trustee Reporting
0.00
$0.00
Employee Matters
0.00
$0.00
Non-Working Travel
0.00
$0.00
Tax Advice
4.70
$5,060.00
Department of Justice Investigations
77.40
$64,492.50
Congressional Investigation
55.40
$45,832.50
Federal Trade Commission Investigation
2.40
$2,215.00
Litigation and Adversary Proceedings
0.00
$0.00
Professional Retention/Fee Issues
53.8
$46,145.00
Fee Application Preparation
24.8
$21,447.50
TOTAL
223.30
$188,987.50
EXPENSE SUMMARY
Expense Category
Total Expenses
Consultant Fees
$147,803.75
Hosting Charges
$4,697.03
Travel – Air Fare
$713.32
Travel – Food and Beverage
$18.23
Travel – Hotel
$234.12
Travel – Other Costs
$40.00
Travel – Taxi
$75.73
TOTAL
$153,582.18
Case 22-10951-CTG Doc 534 Filed 02/14/23 Page 5 of 10
-6-
BUDGET
Project Category
Estimated
Hours
Estimated
Fees
Hours
Billed
Fees Sought
Case Administration
12.00
$10,000.00
4.80
$3,795.00
Creditor Inquiries
0.00
$0.00
0.00
$0.00
Executory Contracts/Unexpired Leases
0.00
$0.00
0.00
$0.00
Automatic Stay/Adequate Protection
0.00
$0.00
0.00
$0.00
Plan of Reorganization/Disclosure
Statement
0.00
$0.00
0.00
$0.00
Use, Sale or Lease of Assets
0.00
$0.00
0.00
$0.00
Financing matters
0.00
$0.00
0.00
$0.00
Claims Administration
0.00
$0.00
0.00
$0.00
Court Hearings
0.00
$0.00
0.00
$0.00
General Corporate
0.00
$0.00
0.00
$0.00
Schedules/SOFA/U.S. Trustee Reporting
0.00
$0.00
0.00
$0.00
Employee Matters
0.00
$0.00
0.00
$0.00
Non-Working Travel
0.00
$0.00
0.00
$0.00
Tax Advice
5.00
$5,000.00
4.70
$5,060.00
Department of Justice Investigations
70.00
$60,000.00
77.40
$64,492.50
Congressional Investigation
70.00
$60,000.00
55.40
$45,832.50
Federal Trade Commission Investigation
25.00
$20,000.00
2.40
$2,215.00
Litigation and Adversary Proceedings
0.00
$0.00
0.00
$0.00
Professional Retention/Fee Issues
60.00
$50,000.00
53.80
$46,145.00
Fee Application Preparation
25.00
$20,000.00
24.80
$21,447.50
Total
267.00 $225,000.00
223.30
$188,987.50
STAFFING PLAN
Category of Timekeeper
NUMBER OF TIMEKEEPERS
PROJECTED TO WORK ON
MATTER DURING BUDGET
PERIOD
AVERAGE
HOURLY
RATE
Partners and Counsel
7
$1,203.57
Associates
7
$682.14
Staff Attorney
2
$600.00
Paralegals and Other Non-Attorney
Legal Staff
3
$400.00
Case 22-10951-CTG Doc 534 Filed 02/14/23 Page 6 of 10
-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)
:
:
(Jointly Administered)
Debtors.1
:
:
Obj. Deadline: March 6, 2023 at 4:00 p.m. (ET)
:
Hearing Date: Scheduled only if necessary
------------------------------------------------------------ x
CERTIFICATION OF DANIEL J. MERRETT IN SUPPORT
OF FIRST INTERIM FEE APPLICATION OF JONES DAY
1.
I am a partner with the applicant firm, Jones Day (the “Applicant”).
I make this certification regarding the Applicant’s first interim application for payment of
compensation and reimbursement of expenses (the “Interim Fee Application”) for the period
October 3, 2022 through December 31, 2022 (the “Interim Fee Period”) to certify to certain
matters addressed in the Order Establishing Procedures for Interim Compensation and
Reimbursement of Expenses of Professionals [Dkt. 136] (the “Interim Compensation Order”).2
2.
Pursuant to the Interim Compensation Order, the Court authorized the
Applicant to file this Interim Fee Application, which has been prepared in accordance with the
procedures set forth in both the Interim Compensation Order and the Guidelines for Reviewing
Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. § 330 by
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 herein but not otherwise defined have the meanings given to them in the Interim
Compensation Order.
Case 22-10951-CTG Doc 534 Filed 02/14/23 Page 7 of 10
- 2 -
Attorneys in Larger Chapter 11 Cases, effective November 1, 2013 (the “U.S. Trustee
Guidelines”).
3.
I have reviewed the Interim Fee Application, including each Monthly Fee
Application relating to the Interim Fee Period covered by the Interim Fee Application, and I
hereby certify that such applications comply with the Interim Compensation Order and the
applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules.
Moreover, I have reviewed Local Rules 2016-1 and 2016-2, and submit that this Interim Fee
Application complies with such rules.
Disclosures Pursuant to the Revised U.S. Trustee Guidelines
4.
The Court authorized the Debtors to retain the Applicant as special
counsel in these chapter 11 cases pursuant to an order entered on November 2, 2022 [Dkt. 198]
(the “Retention Order”).
5.
Prior to the Petition Date, the Debtors provided Jones Day with the
following advance payments for professional services and expenses to be provided to the
Debtors (together, the “Fee Advance”): (a) a payment of $100,000.00 on September 29, 2022
and (b) a payment of $75,000.00 on October 3, 2022. Subsequent thereto, Jones Day applied the
Fee Advance to outstanding estimated fees and expenses for the period through the Petition Date
(the “Estimated Amount”). After application of the Estimated Amount, the Fee Advance balance
was $108,907.06 on the Petition Date. Based on the reconciliation of prepetition fees and
expenses actually incurred for the period prior to the Petition Date, the balance of the Fee
Advance is currently $102,907.06
6.
Sixteen professionals are included in this Interim Fee Application.
Of those sixteen professionals, twelve professionals billed fewer than fifteen hours during the
Interim Fee Period.
Case 22-10951-CTG Doc 534 Filed 02/14/23 Page 8 of 10
- 3 -
7.
The Applicant discussed its rates, fees, and staffing plan with the Debtors
at the outset of its engagement and throughout these cases.
8.
Consistent with its own internal policies and to comply with the
“reasonableness” requirements of section 330 of the Bankruptcy Code, Jones Day has reviewed
its monthly service descriptions and expense detail and has determined that certain fees should
not be charged to the Debtors. In particular, Jones Day has voluntarily determined that
$22,190.00 in fees should not be charged to the Debtors. This Interim Fee Application reflects
that adjustment.
Statement of the Applicant
9.
Pursuant to section C5 of the U.S. Trustee Guidelines, the Applicant
responds to the questions identified therein as follows:
Question 1:
Did Jones Day agree to any variations from, or alternatives
to, Jones Day’s standard or customary billing rates, fees or terms for
services pertaining to this engagement that were provided during the
Interim Fee Period? If so, please explain.
Answer:
No.
Question 2:
If the fees sought in the Interim Fee Application as
compared to the fees budgeted for the Interim Fee Period are higher by
10% or more, did Jones Day discuss the reasons for the variation with the
client?
Answer:
Not applicable.
Question 3:
Have any of the professionals included in the Interim Fee
Application varied their hourly rate based on geographic location of the
bankruptcy case?
Answer:
No.
Question 4:
Does the Interim Fee Application include time or fees
related to reviewing or revising time records or preparing, reviewing or
revising invoices?
Case 22-10951-CTG Doc 534 Filed 02/14/23 Page 9 of 10
- 4 -
Answer:
Except as previously disclosed in the Monthly Fee
Applications, this Application does not include any time or fees related to
reviewing, revising or preparing invoices.
Question 5:
Does the Interim Fee Application include time or fees for
reviewing time records to redact any privileged or other confidential
information? If so, please quantify hours and fees.
Answer:
No.
Question 6:
Does the Interim Fee Application include any rate increases
since Jones Day’s retention in these cases?
Answer:
No.
Dated: February 14, 2023
/s/ Daniel J. Merrett
Daniel J. Merrett
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