Declaration of Salim Kafiti in Support of Plan Confirmation — In re KServicing

Record facts

U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 633 · 2023-03-09 · Docket on CourtListener

Summary

A declaration of Salim Kafiti, Deputy General Counsel of Kabbage, Inc. d/b/a KServicing, filed March 9, 2023 as Doc 633 in the jointly administered Chapter 11 cases of Kabbage, Inc. d/b/a KServicing, et al., Case No. 22-10951 (CTG), in the United States Bankruptcy Court for the District of Delaware. Made under 28 U.S.C. § 1746, it supports confirmation of the Amended Joint Chapter 11 Plan of Liquidation at Docket No. 627 and the plan supplements at Docket No. 561 and Docket No. 611. The declaration describes the debtors' objectives, including transferring servicing of remaining PPP Loan portfolios and winding down operations, and states the Amended Plan is the only chapter 11 plan on file. It sets out the classification scheme, with six impaired classes and Reserve Bank Claims in Class 3 separate from General Unsecured Claims in Class 4.

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

RLF1 28709616V.1 
UNITED STATES BANKRUPTCY COURT 
DISTRICT OF DELAWARE 
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: 
 
In re 
: 
Chapter 11 
 
: 
 
KABBAGE, INC. d/b/a KSERVICING, et al., : 
Case No. 22-10951 (CTG) 
 
: 
 
Debtors.1 
: 
(Jointly Administered) 
 
 
 
: 
: 
: 
 
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DECLARATION OF SALIM KAFITI IN SUPPORT OF  
CONFIRMATION OF AMENDED JOINT CHAPTER 11 PLAN OF LIQUIDATION 
OF KABBAGE, INC. (d/b/a KSERVICING) AND ITS AFFILIATED DEBTORS 
 
 
I, Salim Kafiti, pursuant to 28 U.S.C. § 1746, hereby declare under penalty of perjury that 
the following is true and correct to the best of my knowledge, information, and belief:  
1. 
I am the Deputy General Counsel and Assistant Secretary of Kabbage, Inc. 
d/b/a KServicing (“KServicing”)2 and its debtor affiliates in the above-captioned Chapter 11 
Cases (collectively, the “Debtors”), and have held this position since February 2022.  I have more 
than 20 years of experience serving in legal counsel roles, including as a consultant and attorney 
supporting the SVP Managing Counsel and Global Contract Team at ADP, Inc.; as Senior 
Associate General Counsel at Electrolux, where I worked for more than 13 years and also held the 
 
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 and not otherwise defined herein shall have the meanings ascribed to such terms in the 
Amended Plan (defined herein), the Amended Disclosure Statement for the Amended Joint Chapter 11 Plan of 
Liquidation of Kabbage, Inc. (d/b/a KServicing) and its Affiliated Debtors (Docket No. 467) (the “Disclosure 
Statement”), or the concurrently filed Debtors’ (I) Memorandum of Law in Support of Confirmation of Amended 
Joint Chapter 11 Plan of Liquidation of Kabbage, Inc. (d/b/a KServicing) and Its Affiliated Debtors and (II) Omnibus 
Reply to Objections Thereto (the “Memorandum”), as applicable. 
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roles of interim Vice President and General Counsel, Associate General Counsel, Assistant 
General Counsel and Assistant Secretary; and as an attorney at Jones Day.  I hold a Juris Doctor 
from Case Western Reserve University School of Law.  I have also studied business administration 
at Miami University in Ohio and the University of North Carolina at Charlotte.   
2. 
I submit this declaration (the “Declaration”) in support of confirmation of 
the Amended Joint Chapter 11 Plan of Kabbage, Inc. (d/b/a KServicing) and Its Affiliated Debtors 
(Docket No. 627) (as may be amended, modified, supplemented, or restated, the “Amended 
Plan”), including the documents comprising the Plan Supplement, dated February 21, 2023, 
(Docket No. 561) the Notice of Filing of Second Supplement to the Amended Joint Chapter 11 
Plan of Liquidation of Kabbage, Inc. (d/b/a KServicing) and its Affiliated Debtors, (Docket No. 
611) and the Notice of Filing of Third Supplement to the Amended Joint Chapter 11 Plan of 
Liquidation of Kabbage, Inc. (d/b/a KServicing) and its Affiliated Debtors, filed 
contemporaneously herewith (as may be further amended, modified, restated, or supplemented, 
the “Plan Supplements”).  I have reviewed, and I am generally familiar with, the provisions of 
the Amended Plan, the documents comprising the Plan Supplements, the Disclosure Statement, 
and the requirements for confirmation of the Amended Plan under section 1129 of the Bankruptcy 
Code.  I was personally involved in the development of the Amended Plan and its related 
documents.   
3. 
In my capacity as Deputy General Counsel, I am knowledgeable and 
familiar with the Debtors’ day-to-day operations and business affairs, books and records, and these 
Chapter 11 Cases.  Except as otherwise indicated, all facts set forth herein (or incorporated by 
reference herein) are based upon my personal knowledge, my review of relevant documents and 
other information, including relevant historical business records of the Debtors and information 
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provided to me by employees and contractors hired by the Debtors and working under my 
supervision, my duties and responsibilities as Deputy General Counsel for the Debtors, my 
familiarity with the Debtors’ business operations, as well as my discussions with the Debtors’ 
board of directors (the “Board”), management team (“Management”), and advisors.  If I were 
called upon to testify, I could and would testify competently to the facts set forth herein.  
The Debtors’ Objectives 
4. 
The Debtors commenced these Chapter 11 Cases with a clear strategy and 
to achieve certain objectives, including to: 
 preserve the remaining assets of the Debtors’ estates for the purpose of maximizing 
creditor recoveries; 
 
 effectuate the transition of the servicing of the Debtors’ remaining PPP Loan 
portfolios, or develop the Debtors’ ability to service the balance of the PPP Loan 
portfolios; 
 
 provide an equitable distribution to the Debtors’ stakeholders; 
 
 minimize the impact to the PPP borrowers from any disruption in loan servicing 
caused by the depletion of the Debtors’ assets; and 
 
 conduct a responsible wind down of the Debtors’ remaining operations and 
complete an organized liquidation of the Debtors.  
5. 
  The Debtors have had limited liquidity during these Chapter 11 Cases and 
commenced these cases at a time when they were facing numerous investigations and related 
demands in connection with the PPP Loan program.  The Debtors recognized that achieving their 
objectives would not be easy and would require consensus of many of the Debtors’ largest 
stakeholders, nearly all of whom commenced those investigations and related demands.    
Accordingly, the Debtors initiated and remained in close contact with the Reserve Bank, 
Department of Justice, SBA, and Partner Banks throughout these proceedings, and reached, or are 
in the process of discussing and negotiating, various resolutions over remaining issues that impact 
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the Debtors’ ability to achieve their goals.  In particular, as discussed herein, the Debtors have 
worked closely with the Reserve Bank to reach an agreement on all material matters of these 
Chapter 11 Cases, including with respect to the use of cash collateral, transfer of servicing of the 
PPPLF Loans, Amended Plan (notably, the Reserve Bank’s treatment, the release provisions, and 
third party consent and consultation rights), documents comprising the Plan Supplements, and the 
proposed Confirmation Order.   
6. 
The Debtors also recognized that it would require tremendous effort and 
cooperation to establish and implement a process to concurrently transition the Debtors’ PPP Loan 
servicing obligations to four different entities.  As discussed further in the concurrently filed 
Declaration of Laquisha Milner in Support of Confirmation of Amended Joint Chapter 11 Plan of 
Liquidation of Kabbage, Inc. (d/b/a KServicing) and its Affiliated Debtors, the Debtors have made 
comprehensive and coordinated efforts to effectuate the PPP Loan transition despite the 
complexities and challenges in performing this herculean task in an accelerated time period while 
continuing day-to-day operations (including loan servicing), progressing these Chapter 11 Cases, 
and resolving the numerous investigations and related demands arising from the Debtors’ 
involvement in the PPP Loan program.   
7. 
Members of the Debtors’ Board and Management were put in place at 
various times after the American Express Transaction, but prior to the commencement of these 
cases.  These individuals have directed and overseen the chapter 11 process with the assistance of 
the Debtors’ advisors and with an eye toward the goals described above.  At all times, the Board 
and Management have been and remain actively engaged with the Debtors’ advisors to preserve 
and maximize the value of the Debtors’ estates for the benefit of all creditors.  These efforts were 
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in furtherance of avoiding disruption to PPP borrowers where possible and effectuating an orderly 
and efficient wind down of the Debtors’ remaining operations.   
The Amended Plan 
A. General Overview 
8. 
The Amended Plan, the only chapter 11 plan on file, represents the 
culmination of the Debtors’ efforts in these Chapter 11 Cases to achieve their goals stated at the 
outset with the support of a number of key constituents.  The Amended Plan is the product of 
extensive good-faith, arm’s-length negotiations between the Debtors and their major stakeholder 
constituencies, and sets the Debtors on an efficient course toward wind down by (i) permitting the 
transfer of servicing of the Pledged PPPLF Loans to the satisfaction of the Reserve Bank, 
(ii) effectuating the transfer of the Debtors’ other PPP Loan servicing obligations to its Partner 
Banks and the SBA, or their respective designated alternate servicers, (iii) establishing a scheme 
of distributions to creditors according to priorities in the Bankruptcy Code, and (iv) permitting the 
Debtors, or the Wind Down Estates, as applicable, to pursue other settlements and monetization 
of remaining assets in furtherance of the Amended Plan. Throughout these cases, the Debtors, led 
by the Board and Management, have worked to protect the interests of all constituents, with the 
objective of achieving consensus wherever possible.  The Debtors developed the Amended Plan 
in good faith and in close consultation with their primary stakeholders following diligence and 
negotiations.      
9. 
The Amended Plan, including the ability to transfer servicing of the Pledged 
PPPLF Loans and the Debtors’ other PPP Loan servicing obligations, achieves all of the objectives 
the Debtors sought to achieve at the outset of these cases.  Specifically, with the exception of the 
Carr Plaintiffs, confirmation of the Amended Plan has only drawn limited objections, and it is a 
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plan that maximizes value, minimizes disruption to customers and other constituents, including 
PPP borrowers where possible, and provides for the most effective transition possible of the 
Debtors’ holdings and servicing obligations given the complex regulatory issues embedded in the 
PPP Loan program.  The Amended Plan framework was negotiated to provide for possible 
settlements and transactions that would pave the way for a swift confirmation process and 
resolution of these Chapter 11 Cases; not to penalize any party in interest.  The Amended Plan 
may also result in recoveries for the holders of General Unsecured Claims through their GUC Pool 
Class B Interests, which will be funded with any proceeds (including any proceeds generated by 
the Wind Down Estates’ pursuit of Estate Causes of Action) remaining after distributions to senior 
Classes of Claims.  I believe that the Amended Plan is fair and reasonable and offers benefits, 
including the potential recoveries to General Unsecured Creditors, which would not be available 
in the absence of the proposed Amended Plan without significant and uncertain litigation. 
10. 
Confirmation of the Amended Plan represents the best available path to 
conclude these Chapter 11 Cases, maximize creditor recoveries, and effectuate the transition of the 
Debtors’ assets and obligations.  The alternative is almost certainly a liquidation filled with 
litigation of substantially all of the issues that the Amended Plan, and settlements in furtherance 
of the Amended Plan, will resolve.  Given the fact that the Debtors are already winding down their 
business, it is highly unlikely any additional capital could be obtained in a reasonable timeframe.  
If the Amended Plan is not confirmed, the Debtors simply do not have the financial or human 
resources to pivot to an alternative transaction or substantially delay confirmation of the Amended 
Plan; I believe the alternative is a chapter 7 liquidation.   
11. 
I believe that the Reserve Bank’s acceptance of the Amended Plan reflects 
the Amended Plan’s fairness and the good faith efforts of the parties to achieve the objectives of 
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chapter 11.  The Amended Plan was proposed with legitimate and honest purposes and for no other 
purpose as reflected by the record herein, the Disclosure Statement, at the hearings leading up to 
confirmation of the Amended Plan, and in the Memorandum.  For the avoidance of doubt, the 
principal purpose of the Amended Plan was not the avoidance of taxes or Section 5 of the Securities 
Act.  In sum, I believe that the Debtors have acted in good faith and with the best intentions for 
creditors in proposing the Amended Plan. 
B. Classification Scheme 
12. 
In designing the Amended Plan, the Debtors separately classified claims 
against, and interests in, the Debtors based upon the difference in legal nature and/or priority of 
such claims and interests.  In such classification, there has never been an intention or even a 
discussion of classifying or treating claims under the Amended Plan for any other purpose, 
including any improper purpose or to unfairly discriminate between holders of claims and interests.  
I understand that for each separate class, the Amended Plan provides for whether the claims or 
interests are impaired or unimpaired and that the treatment for each claim or interest within a 
particular class, unless a holder agrees to less favorable treatment, is the same as each other claim 
or interest in that class.   
13. 
The Amended Plan has six impaired classes, each of which was classified 
separately based on the priority and legal nature of the claims or interests as against the Debtors.  
Specifically, the Reserve Bank Claims (Class 3) are classified separately from General Unsecured 
Claims (Class 4) due to the fact that the Reserve Bank’s claims are either secured or, to the extent 
not secured, priority claims under the Bankruptcy Code.  No similarly situated classes are treated 
differently; no Class of equal priority is receiving more favorable treatment; no Class that is junior 
to the rejecting Classes will receive or retain any property on account of the claims or interests in 
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such junior Class; and no Class senior to Class 4 is receiving more than a 100 percent recovery 
under the Amended Plan.   
C. Means of Implementation 
14. 
The Amended Plan and the various documents and agreements set forth in 
the Plan Supplements provide adequate means for the Amended Plan’s implementation, including 
(a) identification of sources of consideration to be distributed under the Plan; (b) provisions 
governing distributions under the Amended Plan; (c) provisions governing the Debtors’ ongoing 
servicing of loans before and, if necessary, after the Effective Date, the ability to transfer servicing 
obligations of the Pledged PPPLF Loans and other PPP Loan servicing obligations, the creation, 
governance, and funding of the GUC Pool and the Wind Down Estates, the transfer of assets to 
the Wind Down Estates, and the potential sale of Legacy Loans; (d) provisions governing the 
appointment, authority, and duties of the Wind Down Officer; (e) provisions regarding the wind 
down and dissolution of the Debtors in accordance with the Amended Plan; (f) the vesting of all 
of the property of the Debtors’ Estates and any Estate Causes of Action in accordance with Section 
10.1 of the Amended Plan; and (g) authorization for all actions contemplated by the Amended 
Plan. 
D. Plan Releases  
15. 
The Amended Plan provides for two (2) categories of releases: 
i. 
releases of certain claims relating to the Debtors or these Chapter 11 Cases 
held by the Debtors and each of their respective Affiliates, on behalf of 
themselves and their Estates, including any successor to the Debtors such 
as the Wind Down Estate, against the Released Parties and their Related 
Parties, excluding any claim or Cause of Action against any Debtor or 
Affiliate arising out of the American Express Transaction or the distribution 
of any consideration or value received on account of the American Express 
Transaction (the “Debtor Releases”), see Amended Plan § 10.5; and 
ii. 
releases of certain claims relating to the Debtors or these Chapter 11 Cases 
against the Released Parties by the Releasing Parties and their Related 
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Parties, excluding any right to enforce the Amended Plan or as otherwise 
provided in the Plan or in the Confirmation Order (the “Third Party 
Releases”).   
16. 
I believe that the Amended Plan, including the releases therein, is in the best 
interests of the Debtors’ estates and creditors and provides a much-needed resolution to these 
Chapter 11 Cases.   
E. Debtor Releases  
17. 
No party has objected to the Debtor Releases.  The Debtor Releases, which 
were approved by the Board in conjunction with the Amended Plan and in the Debtors’ sound 
business judgment: (a) are essential to the formulation and implementation of the Plan; (b) are in 
exchange for good and valuable consideration provided by the Released Parties; (c) are in the best 
interests of the Debtors and all holders of claims and interests; and (d) were given and made after 
due notice and opportunity for a hearing.   
18. 
The Debtor Releases are narrowly tailored to serve their critical purposes 
without diminishing the estate.  The Debtor Releases do not include the release of any claim or 
cause of action against any Debtor or Affiliate arising out of the American Express Transaction, 
or the distribution of any consideration or value received on account of the American Express 
Transaction, which are the primary claims the Board believes could potentially lead to recoveries.  
The Debtor Releases also do not release any individual from any claim related to an act or omission 
that is determined by a court of competent jurisdiction to have constituted actual fraud, gross 
negligence, criminal misconduct, or willful misconduct.  Additionally, the Debtor Releases were 
essential in formulating the Amended Plan.  Included in the Released Parties are the Debtors’ 
Professionals, the Board, and Management, whose contributions and efforts were, and continue to 
be, critical in prosecuting these Chapter 11 Cases and performing the duties required to confirm 
the Amended Plan and reach the Effective Date.  Also included as a Released Party is the Reserve 
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Bank which, among other things, has agreed to accept treatment under the Amended Plan that is 
less than what the Bankruptcy Code requires.  Put simply, the Debtor Releases are a critical aspect 
of the Amended Plan.    
19. 
The scope of the release of the Released Parties in section 10.5 of the 
Amended Plan has been significantly narrowed from what the Debtors originally proposed in the 
iteration of the chapter 11 plan filed early in these cases with the aim of ensuring that none of the 
Released Parties were involved with the American Express Transaction.  To the best of my 
knowledge, information and belief, and after reasonable inquiry, including discussions with the 
Debtors’ advisors and certain of the Debtors’ Released Related Parties, the Debtors’ Released 
Related Parties, each in their respective capacities as such, had no role in the negotiation, 
recommendation, approval, or execution of the American Express Transaction. 
20. 
The Board determined that, in its business judgment, the Debtor Releases 
were appropriate and recommended that they be incorporated into the Amended Plan, which 
provides significant value to all stakeholders. 
21. 
The Debtor Releases are essential to the success of the Amended Plan, and 
served as a crucial inducement for the Released Parties to participate in these cases and facilitate 
the Amended Plan and wind down process of the Debtors.  It is also my understanding that the 
Debtor Releases served as a core negotiation point with the Reserve Bank in discussions 
surrounding the Amended Plan.  Had the Debtor Releases not been provided, it was uncertain 
whether and to what extent the Reserve Bank would agree to other terms of the Amended Plan—
which benefit all stakeholders—and vote in favor of the Amended Plan.  Acceptance of the Debtor 
Releases allowed the Debtors to move forward with the Amended Plan and avoid uncertain and 
value-destructive litigation with creditors, including the Reserve Bank, which would have 
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unnecessarily delayed, if not thwarted entirely, the Debtors’ ability to successfully consummate 
the Amended Plan and transfer the servicing obligations of the Pledged PPPLF Loans and other 
PPP Loans, resulting in disruption and delay for PPP borrowers and significantly increased 
economic exposure for the Reserve Bank and the Partner Banks.  Further, the Debtors’ directors, 
officers, employees, and advisors, among others, guided the Debtors through these challenging 
times and were essential in negotiating the terms of the Amended Plan.   
F. Third Party Releases  
22. 
The Third Party Releases are set forth in Section 10.6 of the Amended Plan 
and do not release any individual from any claim related to an act or omission that is determined 
by a court of competent jurisdiction to have constituted a criminal act, intentional fraud, gross 
negligence, or willful misconduct.  I understand that, in soliciting votes on the Amended Plan, the 
Debtors provided the Releasing Parties affected by the releases with ample opportunity to opt-out 
of the releases: 
 The Court-approved ballots sent to all holders of claims entitled to vote in Class 
3 (Reserve Bank Claims) and Class 4 (General Unsecured Claims) stated in 
bold letters that certain releases were contained in the Amended Plan and 
Disclosure Statement, restated the text of the releases in their entirety, and 
provided instructions for how to opt out of such releases.  The Ballots also 
indicated that Releasing Parties entitled to vote on the Plan who abstained from 
voting are deemed to have consented to the Third Party Release unless they 
affirmatively opted out as explicitly stated on the Ballots.   
 
 With respect to holders of claims or interests not entitled to vote on the 
Amended Plan (which did not receive a ballot), such holders received a 
Confirmation Hearing Notice that was approved by the Court.  The 
Confirmation Hearing Notice clearly identified the releases and also stated that 
non-voting claimants would be deemed to have granted the Third Party 
Releases unless they timely objected to such releases by the Amended Plan 
objection deadline. 
 
23. 
The Third Party Releases apply only to holders of claims and interests who, 
with full and proper notice, consented to such releases by electing not to opt out of, or object to, 
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the releases.  I also believe that the Third Party Releases are sufficiently specific to put the 
Releasing Parties on notice of the claims being released as they, among other things, describe the 
nature and type of claims being released.   
24. 
Further, I believe that the Third Party Releases are an integral part of the 
Amended Plan because they facilitated participation in both the Amended Plan and the chapter 11 
process by the Released Parties and were critical in gaining their support for the Amended Plan, 
particularly the Reserve Bank.  Such participation and support resulted in, among other matters, 
consensual use of cash collateral to fund these Chapter 11 Cases, and the Reserve Bank’s 
agreement to treatment under the Amended Plan that I understand is less favorable than what it 
may have been entitled to under the Bankruptcy Code.  Accordingly, the Third Party Releases 
were a fundamental negotiation point and appropriately offer certain protections to parties that 
constructively participated in the Chapter 11 Cases. 
25. 
Finally, the Third Party Releases are given for consideration.  The Released 
Parties have played an extensive and integral role in the Debtors’ Chapter 11 Cases, including, 
among other things: (a) agreeing to the consensual use of cash collateral (as to the Reserve Bank); 
(b) maximizing value for the Debtors’ Estates by allowing for the transfer of servicing obligations 
affecting Pledged PPPLF Loans and the other PPP Loans, sale of certain assets, and wind down of 
the Debtors; (c) negotiating the Amended Plan and settlements in furtherance of the Amended 
Plan; (d) preserving value for unsecured creditors through the expeditious resolution of these 
Chapter 11 Cases; and (e) with respect to the Debtors’ board of directors, officers, and employees, 
devoting significant time to navigating the Debtors through these Chapter 11 Cases in addition to 
their regular duties and taking great efforts to prosecute the Chapter 11 Cases and achieve 
confirmation of the Amended Plan.  These substantial contributions led to the development of the 
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Amended Plan, which will facilitate the Debtors’ goals of effectuating an orderly wind down.  All 
parties in interest benefit from the transactions contemplated by the Amended Plan and the 
significant contributions of the Released Parties in furtherance thereof. 
26. 
Based on my knowledge of the Debtors’ negotiations with the Released 
Parties throughout these Chapter 11 Cases, I do not believe that the Debtors would have been able 
to secure all of the valuable consideration provided by the Amended Plan or consummate value-
maximizing transactions for the benefit of all stakeholders without the Third Party Releases.  
G. Exculpation Provision  
27. 
Based on my participation in the negotiations regarding the Amended Plan, 
I believe the exculpation provision in Section 10.7 of the Amended Plan (the “Exculpation 
Provision”) is appropriate, as it provides protection to the Exculpated Parties that have participated 
in the Debtors’ Chapter 11 Cases in good faith.  The Exculpation Provision is narrowly tailored to 
address matters relating to these Chapter 11 Cases and only those arising between the 
Commencement Date and the Effective Date, with an exception for any claims based on any act 
or omission that is a criminal act or constitutes intentional fraud, gross negligence, or willful 
misconduct as determined by a Final Order.   
28. 
Moreover, the Debtors limited the Exculpation Provision such that it does 
not apply to Former Officers and Directors.  I believe the protections afforded to the Exculpated 
Parties by the Exculpation Provision are reasonable and appropriate, given that the Exculpated 
Parties provided substantial contributions to the Debtors’ estates during the restructuring, and 
because I believe the Chapter 11 Cases could not have progressed as rapidly and productively 
without their contributions.     
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29. 
I believe that failure to approve the Exculpation Provision would undermine 
the purpose of the Amended Plan and the settlements embodied therein by allowing parties to 
pursue claims post-bankruptcy that are otherwise fully and finally resolved by the Amended Plan.   
H. Injunction Provision  
30. 
I believe that the injunction provision in section 10.3 (the “Injunction 
Provision”) is critical to the Amended Plan because it provides certainty to the Debtors, the Wind 
Down Officer, and other parties in interest that the Amended Plan will be enforceable in 
accordance with its terms.  Moreover, the Injunction Provision is essential to protect the assets of 
the Debtors’ estates from potential litigation from prepetition creditors on and after the Effective 
Date, particularly given the corporate structure of the Wind Down Estates—where the Debtors 
will wind down “in place” as opposed to moving all estate assets into a post-confirmation trust.  
Absent the Injunction, any such litigation by a prepetition creditor would hinder the Wind Down 
Officer’s ability to effectively fulfill the responsibilities contemplated by the Amended Plan, and 
would deplete the Wind Down Estates of scarce resources, frustrating the Amended Plan’s purpose 
and upending the distribution scheme.  The Injunction Provision is therefore necessary to 
implement the releases and other provisions of the Amended Plan and is tailored to achieve that 
purpose. 
I. Other Considerations 
31. 
Section 8 of the Amended Plan provides for the cure of any default for each 
executory contract and unexpired lease to be assumed pursuant to the Amended Plan and for the 
amount necessary to cure any such default in accordance with the underlying executory contract 
and unexpired lease and applicable nonbankruptcy law.  In accordance with Section 8.2 of the 
Amended Plan and the Disclosure Statement Order, the Debtors filed the Notice of Potential 
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Assumption and Cure Amounts in Connection with Contracts and Leases (Docket No. 566) (the 
“Assumption Notice”).  All executory contracts and unexpired leases that the Debtors determined 
could potentially be assumed as of the Effective Date were listed thereto with the applicable 
proposed cure costs.  Parties wishing to object to the assumption of an executory contract and 
unexpired lease had until March 6, 2023 at 4:00 p.m.3 (Prevailing Eastern Time) to object.  
Following the objection deadline, the Debtors filed the “Notice of Filing of Second Supplement to 
the Amended Joint Chapter 11 Plan of Liquidation of Kabbage, Inc. (d/b/a KServicing) and its 
Affiliated Debtors” (Docket No. 611), which included (i) a revised assumption schedule containing 
certain additional contracts that the Debtors determined would be beneficial to assume; and (ii) 
pursuant to section 8.6 of the Amended Plan, a rejection schedule (“Rejection Schedule”) 
reflecting certain intellectual property contracts, licenses, royalties, or other similar agreements 
that the Debtors decided to reject.  Further, on March 6, 2023, the Debtors filed the “Notice of 
Rejection of Certain Agreements Pursuant to the Plan” (Docket No. 613) notifying the 
counterparties of the contracts listed in the Rejection Schedule that, pursuant to 8.1 of the Amended 
Plan and the Confirmation Order, their contracts will be rejected on the Effective Date.4   If any 
related objection could not be resolved by the parties, the Debtors adjourned their request to 
assume the executory contract or unexpired lease pending resolution. 
32. 
As part of the Debtors’ Plan Supplement filings, the Debtors have contemporaneously 
disclosed the identity of the Wind Down Officer and related compensation information.  In 
accordance with Section 5.4(e) of the Amended Plan, on the Effective Date, (a) the Wind Down 
 
3 The Debtors granted a 24 hour extension to file a response to the Assumption Notice to certain counterparties of 
contracts listed on the Assumption Notice.  
4  Of note, the Debtors reserved the right to assume or assume and assign any contracts or leases with the consent of 
the non-Debtor counterparty to such contract or lease.   
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Officer shall be the sole representative of, and shall act for, the Wind Down Estates, and (b) the 
Debtors’ then existing Board and Management shall be relieved of any and all duties and shall be 
deemed to have resigned.   
33. 
In accordance with section 2.2 of the Amended Plan, all Fee Claims must be reviewed by 
the Court and approved.  The Amended Plan provides for the payment in full of priority claims 
and administrative expense claims, unless the holder of such claims agrees to less favorable 
treatment, subject to the timing parameters as more fully described in the Amended Plan.  The 
Amended Plan does not provide for any rate changes and provides for the payment of all statutory 
fees.   
34. 
Prior to and at the time these Chapter 11 Cases were commenced, the Debtors did not have 
any existing retiree benefits, nor do the Debtors have any domestic support obligations.  Moreover, 
no Debtor is an “individual” as I understand that term to be used in the Bankruptcy Code.  Finally, 
each Debtor is a moneyed, business, or commercial corporation.     
 
 
Case 22-10951-CTG    Doc 633    Filed 03/09/23    Page 16 of 17

 
 
17 
RLF1 28709616v.1 
I declare under penalty of perjury that the foregoing is true and correct to the best of 
my knowledge and belief.  
Dated: March 9, 2023 
Charlotte, North Carolina 
 
 
 
 
 
 
 
 
 
 
/s/ Salim Kafiti                                   
 
 
 
 
 
 
 
 
Name: Salim Kafiti 
 
 
 
 
 
 
 
Title: Deputy General Counsel 
 
 
 
 
 
Kabbage, Inc. d/b/a KServicing 
 
 
 
 
Case 22-10951-CTG    Doc 633    Filed 03/09/23    Page 17 of 17

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