Declaration of Deborah Rieger-Paganis in Support of Plan Confirmation — In re KServicing

Record facts

U.S. Bankruptcy Court for the District of Delaware · No. 22-10951 · Doc. 634 · 2023-03-09 · Docket on CourtListener

Summary

The declaration of Deborah Rieger-Paganis, a managing director at AlixPartners, LLP and restructuring advisor to the debtors, filed March 9, 2023 as Doc 634 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. Made under 28 U.S.C. § 1746, it supports confirmation of the Amended Joint Chapter 11 Plan of Liquidation and the Plan Supplements. The declaration describes the claims reconciliation process and estimates the claims to be reserved or paid on the Effective Date at approximately $15,000 in administrative expenses and approximately $2.1 million in Class 2 other secured claims, with Class 1 priority non-tax claims estimated at zero. It states that the Reserve Bank holds approximately $427.4 million of claims and that allowed general unsecured claims are estimated at $31 million to $103 million.

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 28709037V.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) 
 
: 
 
Debtors.1 
: 
(Jointly Administered) 
 
 
 
: 
: 
: 
 
 
------------------------------------------------------------ x
 
 
 
 
DECLARATION OF DEBORAH RIEGER-PAGANIS IN SUPPORT OF 
CONFIRMATION OF AMENDED JOINT CHAPTER 11 PLAN OF LIQUIDATION 
OF KABBAGE, INC. (d/b/a KSERVICING) AND ITS AFFILIATED DEBTORS 
 
 
I, Deborah Rieger-Paganis, 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 a managing director at AlixPartners, LLP (“AlixPartners”) and have 
served as a restructuring advisor to Kabbage, Inc. d/b/a KServicing (the “Company”) and its 
debtor affiliates in the above-captioned chapter 11 cases (collectively, the “Debtors”) since April 
2022.  Prior to my involvement with the Company, I served in a variety of roles providing 
extensive experience dealing with bankruptcy matters and companies going through chapter 11, 
including as interim Chief Financial Officer for various chapter 11 debtors, and Vice President of 
Restructuring for the wind down estate of JCPenney.  In addition, I have also served as senior Vice 
President of Financial Planning and Analysis at MasterCard, and Vice President of Finance at Ann 
Taylor corporate.  For a further discussion of my credentials, see the Declaration of Deborah 
 
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. 
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Rieger-Paganis In Support of the Chapter 11 Petitions and First-Day Pleadings dated October 3, 
2022 (Docket No. 13).   
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”),2 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.  I, along with employees of AlixPartners who report to me, prepared the liquidation 
analysis (the “Liquidation Analysis”) annexed as Exhibit C to the Disclosure Statement.     
3. 
In my capacity as managing director of the AlixPartners team serving as the 
Debtors’ restructuring advisors, I am generally knowledgeable and familiar with the Debtors’ day-
to-day operations, business and financial affairs, books and records, and these Chapter 11 Cases.  
 
2  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in 
the Amended Plan, 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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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 Company, information provided to me by the 
Debtors, or advisors to the Debtors, including members of my team, or my duties and 
responsibilities as restructuring advisor for the Debtors.  If I were called upon to testify, I could 
and would testify competently to the facts set forth herein.  
Claims Analysis 
4. 
After the General Bar Date passed, the Debtors, with the assistance of their 
legal and financial advisors, including my team, conducted a diligent review of all claims filed 
against the Debtors with a particular focus on priority, administrative expense, and secured claims. 
The Debtors’ goal during the claims reconciliation process has been to identify certain 
misclassified priority, administrative expense, and/or secured claims that have no basis in the 
Debtors’ books and records supporting each of the claims’ asserted priority or secured status in an 
effort to reduce the total amount of such claims allowed against the Debtors.  With an 
understanding that any unresolved priority, secured, or administrative expense claims will have to 
be reserved for in the Wind Down Budget, the Debtors, with the assistance of their advisors, have 
prioritized objecting to such misclassified claims.  The claims reconciliation process to date has 
revealed that a substantial number of priority, administrative expense, and secured claims filed 
against the Debtors were filed on account of borrowers of either PPP Loans or Legacy Loans that 
the Debtors service.  After review of such claims, the Debtors determined that there is no legal 
basis under the Bankruptcy Code to support a priority, administrative expense, and/or secured 
claim based on a claimants’ borrower status.  
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5. 
Upon review with counsel, the Debtors filed a substantive claims objection 
to certain misclassified claims, which was granted on February 17, 2023.  (Docket No. 546.)  The 
Debtors have since filed a notice of satisfaction to address the payment in full of several other 
claims.  (Docket No. 560.)  The claims reconciliation process is ongoing, and the Debtors continue 
to identify certain late-filed claims that have no basis in the Debtors’ books and records to support 
their asserted status.  The Debtors anticipate filing a second substantive claims objection on or 
about March 14, 2023 in furtherance of the claims reconciliation process.   
6. 
Although the bar date for administrative expense claims has yet to be set, 
the Debtors and their advisors believe that there should not be any significant administrative 
expense claims outstanding, other than the $15,000 reserve in paragraph 8, because the Debtors 
continue to pay postpetition expenses in the ordinary course.3  The Debtors successfully objected 
to the allowance of an administrative expense claim by the Juneau Group, LLC, and I do not 
believe any other material, valid administrative expense claims have been incurred.  I understand 
no administrative expense claims have been filed (other than the aforementioned Juneau Group, 
LLC claim).  Based on their objections to confirmation, I am aware that the Partner Banks are 
contending that they may assert an administrative expense claim at some point in the future based 
on the Debtors’ alleged breach of servicing transfer obligations. To date there are no such claims 
that have been or could be asserted.  At this point, any such claims are purely hypothetical and 
speculative and therefore do not warrant consideration.   
 
3 As provided in the Proposed Confirmation Order, following service of notice of entry of the Proposed Confirmation 
Order, all other Administrative Expense Claimants will have thirty-five (35) days to file and serve their 
Administrative Expense Claims (the “Administrative Expense Claims Bar Date”).  Following the Administrative 
Expense Claims Bar Date, the Debtors, or the Wind Down Estates, as applicable, and their advisors will continue to 
reconcile and make determinations as to allowance of requests for payment of Administrative Expense Claims.   
 
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7. 
Throughout these chapter 11 cases, the Debtors, with the assistance of their 
restructuring advisors, have also been tracking and estimating the amount of secured, 
administrative expense, and priority claims that will either need to be reserved for, or paid, on the 
Effective Date as provided under the Amended Plan (the “Outstanding SAP Claims”).  Allowed 
secured, administrative expense, and priority claims will be paid on the Effective Date (or as 
otherwise set forth in the Amended Plan) and disputed claims will be reserved for.  The 
Outstanding SAP claims amounts are estimated based on Proofs of Claim received by the General 
Bar Date, the Debtors’ books and records, and discussions with members of the Debtors’ 
management team and advisors.4   
8. 
The Debtors estimate the following Outstanding SAP claims need to be 
reserved for or paid as of the Effective Date: 
(i) 
Administrative Expenses: approximately $15,000.  
(ii) 
Class 1 - Priority Non-Tax Claims: approximately $0. 
(iii) 
Class 2 - Other Secured Claims: approximately $2.1 million; provided, 
that, there are funds set aside in restricted escrow cash accounts and in 
security deposits, which may be used to offset any valid claim amounts. 
9. 
In addition to the Outstanding SAP claims, the Reserve Bank has 
approximately $427.4 million of claims representing the estimated principal amount,5 including 
accrued and unpaid interest, and costs and expenses, which will be satisfied through the return of 
the Pledged PPPLF loans.  Additionally, the estimated range of Allowed General Unsecured claims 
 
4 Pursuant to the Notice of Deadlines to File Proofs of Claim, the deadline to file claims against the Debtors, including 
secured claims, priority claims, unsecured non-priority claims, and claims arising under section 503(b)(9) was 
November 30, 2020, at 5:00 p.m. (Prevailing Eastern Time) (the “General Bar Date”).  
5 Estimated as of the Conversion Date in a PPP Transfer scenario.  See 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). 
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is $31 million to $103 million, as reflected in the Disclosure Statement.6  The estimated range does 
not include any potential claims that may be filed by the Department of Justice, Federal Trade 
Commission, or the SBA, because, as of the date hereof, the deadline for Governmental Units to 
file proofs of claim has not yet passed.   
The Plan is in The Best Interest of Creditors 
10. 
The Liquidation Analysis demonstrates that all Classes of claims or interests 
will recover value equal to or in excess of what such claims or interests would receive in a 
hypothetical chapter 7 liquidation, which, for all prepetition creditors other than holders of Priority 
Non-Tax Claims, Other Secured Claims, and Reserve Bank Claims, is $0 in both scenarios.   As 
further detailed in the Amended Plan and Liquidation Analysis, the Debtors have determined that 
holders of claims and interests in each Class would be entitled to the following projected recoveries 
under the Amended Plan—specifically, in a PPP Transfer scenario, and in a hypothetical chapter 
7 liquidation, respectively:7 
Class 
Claim or Interest 
Estimated 
Recovery under 
PPP Transfer 
Scenario in 
Chapter 7 
Estimated 
Recovery under 
the Plan in a 
“Low Case” 
Scenario 
Estimated 
Recovery under 
the Plan in a 
“High Case” 
Scenario 
Administrative Expense Claims 
100% 
100% 
100% 
1 
Priority Non-Tax Claims 
N/A 
N/A 
N/A 
2 
Other Secured Claims 
100% 
100% 
100% 
3 
Reserve Bank Claims 
90.6% 
91.5% 
99.0% 
4 
General Unsecured 
Claims 
0% 
0% 
0% 
5 
Intercompany Claims 
N/A 
N/A 
N/A 
 
6  A range is provided given that the ultimate Allowed amount of any Claim cannot be estimated with any degree of 
certainty. 
7 Of note, the Liquidation Analysis also reflects a scenario comparing the Amended Plan with Post-Effective Date 
Servicing against a hypothetical chapter 7 liquidation.   
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6 
Intercompany Interests 
N/A 
N/A 
N/A 
7 
Subordinated Securities 
Claims 
N/A 
N/A 
N/A 
8 
KServicing Equity 
Interests 
N/A 
N/A 
N/A 
Total Creditor Recovery 
38.9% 
73.8% 
92.2% 
Total Equity Recovery 
N/A 
N/A 
N/A 
 
11. 
The Liquidation Analysis is reasonable and incorporates sound assumptions 
and estimates regarding the Debtors’ assets and claims and the costs associated with a liquidation.  
Together with other members of the AlixPartners team, I developed the assumptions and estimates 
based upon input from the Debtors’ other advisors and based on the team’s knowledge and 
familiarity of the Debtors’ assets and liabilities as well as the projected liquidity and risks to the 
Debtors.  Here, the Debtors have assumed in the Liquidation Analysis, among other things, that:  
(i) 
Neither the trustee in a chapter 7 wind down, or the Wind Down Officer in 
a chapter 11 wind down, will service the PPP Loans after the Conversion 
Date or the Effective Date of the Plan, as applicable.  
(ii) 
In a chapter 7, the Liquidation Analysis assumes the trustee would seek to 
transfer the Debtors’ loan servicing obligations to a third party alternate 
servicer.  The Liquidation Analysis accounts for transfer costs associated 
with transferring the Debtors’ PPP Loan servicing obligations to an 
alternate loan servicer.  In order to do so, a significant data engineering 
process would be undertaken by the trustee and its professionals and any 
operating employees. Such a process would include preparation of all data 
and systems for the alternate servicer to be able to take over servicing the 
loan portfolio. The Liquidation Analysis assumes the transfer process would 
require considerable labor and cost.  
(iii) 
Due to the inherently uncertain nature of litigation, and solely for purposes 
of this analysis, the Liquidation Analysis assumes $0 on account of the 
Debtors’ Causes of Action including any potential fraudulent transfers or 
avoidance actions, including but not limited to any Causes of Action 
relating to the American Express Transaction in either a chapter 7 or chapter 
11.  That figure is not meant to express a view by the Debtors regarding the 
potential recovery under any such Causes of Action.  Moreover, given that 
the recovery on Causes of Action would be the same in a chapter 7 and a 
chapter 11, this assumption has no impact on the analysis.   
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(iv) 
The Liquidation Analysis assumes a sale price of 10% of the principal 
balance for the remaining Legacy Loan portfolio, and the Debtors have 
conservatively assumed recoveries would be the same in either a chapter 7 
or chapter 11.   
(v) 
The cessation of business in a chapter 7 liquidation is likely to trigger certain 
claims that otherwise would not exist under the Plan proposed by the 
Debtors, such as unpaid administrative expenses, and certain executory 
contract and unexpired lease rejection claims. Such claims could be 
significant and some may be administrative expenses while others may be 
entitled to priority in payment over General Unsecured Claims. These 
chapter-7-specific claims are excluded from the Liquidation Analysis, but 
would clearly increase the amount of claims under a chapter 7 liquidation. 
(vi) 
Also excluded from the Liquidation Analysis are estimates for the tax 
consequences, both federal and state, that may be triggered upon the chapter 
7 liquidation and/or sale of assets in the manner described. Such tax 
consequences may be material. 
12. 
The Liquidation Analysis demonstrates that in addition to costs associated 
with administering a chapter 7 liquidation, there would be more General Unsecured Claims in a 
chapter 7 than in a chapter 11 and, as such, in the event that there are sufficient liquidation proceeds 
to satisfy senior claims and the General Unsecured Claims receive a recovery, the Carr Plaintiffs’ 
pro rata recovery would be less in a chapter 7 than in a chapter 11.   
13. 
As demonstrated in the Liquidation Analysis, under the Amended Plan, 
recoveries for holders of claims in Class 4 are projected to be $0, given the amount of claims senior 
in priority and the limited distributable funds, among other assumptions and estimations, including 
that there will be no recovery on account of retained Causes of Action.  Although the projected 
recoveries are $0, treatment under the Amended Plan is relatively more favorable for creditors as 
the Amended Plan does not carry additional chapter 7-specific costs which would potentially 
diminish potential recoveries for general unsecured creditors.  Put simply, the Reserve Bank’s 
consent in this regard provides the Wind Down Officer the ability to pursue Causes of Action that 
may otherwise not be pursued in a chapter 7 due to the various fees associated therewith, for the 
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benefit of all creditors.  This aspect of the Amended Plan is especially beneficial for the Carr 
Plaintiffs, as it creates the opportunity and potential for holders of Class 4 General Unsecured 
Claims to receive more on account of their Claims than the currently projected $0, and in fact do 
better than in a hypothetical chapter 7 liquidation.   
14. 
I understand that the Carr Plaintiffs have questioned the Liquidation 
Analysis, asserting that it does not specifically account for the Third Party Releases, and whether 
or to what extent the claims being released in a chapter 11 would be available for recovery in a 
chapter 7 liquidation.  The Liquidation Analysis does consider and take into account claims against 
the Debtors and their estates—these claims are not released under the Amended Plan’s Third Party 
Releases and are being treated under the Amended Plan.  The Liquidation Analysis does not 
consider direct creditor claims against non-Debtor third parties which may be released under the 
Amended Plan’s Third Party Releases.  I am not aware of any such claims that may be released 
under the Amended Plan that would be available for recovery against non-Debtor third parties in 
a chapter 7; nor do the Carr Plaintiffs identify any such claims.  Additionally, the Third Party 
Releases are consensual, and the Carr Plaintiffs are not releasing claims against non-Debtor third 
parties because each of the Carr Plaintiffs are identified as having opted out of the Third Party 
Releases.   
15. 
The Debtors satisfy the “best interests” test because the Liquidation 
Analysis shows that holders of claims in Class 4 (General Unsecured Claims), would receive no 
recovery in a hypothetical liquidation under chapter 7 and have the potential to receive some 
recovery under the Amended Plan.   
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The Plan is Feasible 
16. 
Throughout these Chapter 11 Cases, AlixPartners, under my guidance, has 
carefully reviewed claims and liabilities of the Debtors and the Debtors’ books and records, 
consulted with the Debtors’ counsel and other advisors, and received input from the Debtors’ 
management and employees who have extensive knowledge of the Debtors’ assets and liabilities. 
AlixPartners has estimated the Debtors’ anticipated sources and uses of funds following 
confirmation and occurrence of the Effective Date of the Plan.   Based on the foregoing, I expect 
that the Debtors will have sufficient funds to meet their post-Effective Date obligations to pay for 
the ongoing costs of administering and consummating the Amended Plan and ultimately closing 
these Chapter 11 Cases, and that the Amended Plan is not a visionary scheme.   
17. 
The Amended Plan embodies a rational approach for: (1) the orderly wind 
down of the Debtors’ estates; and (2) the payment and delivery of distributions to holders of 
Allowed Claims following the Effective Date according to a priority “waterfall”.  In addition, 
holders of Allowed Administrative Expense Claims, Allowed Priority Tax Claims, Allowed 
Priority Non-Tax Claims, and Allowed Other Secured Claims are being paid in full, such that they 
will be unimpaired under the Amended Plan.  Reserve Bank Claims are either (i) secured by the 
PPPLF Collateral or the adequate protection liens provided under the Cash Collateral Order, or (ii) 
to the extent under-secured, such deficiency claims have priority under the Bankruptcy Code.   
18. 
The Amended Plan establishes the GUC Pool to satisfy the priority portion 
of the Allowed Reserve Bank Claims, and thereafter for the benefit of Allowed General Unsecured 
Claims.  According to differences in priority, the Allowed Reserve Bank Claims shall receive GUC 
Pool Class A Interests, and the Allowed General Unsecured Claims shall receive GUC Pool Class 
B Interests.  On the Effective Date, the Debtors will transfer to the GUC Pool any remaining Net 
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Cash Proceeds, which will then be supplemented prior to the conclusion of the Wind Down with 
all remaining Cash in the Wind Down Estates, minus amounts needed to fund the administration 
of the Wind Down Estates.  Then, at the conclusion of the Wind Down, any residual amounts 
remaining in the Wind Down Estates (other than amounts on account of Post-Effective Date 
Servicing Costs, if applicable) shall also be contributed to the GUC Pool.  As described in further 
detail herein, I expect that the Debtors will be able to meet their obligations under the Amended 
Plan to satisfy their estimated administrative costs and fund the Wind Down Estates. 
A. 
Estimated Sources of Funds  
19. 
As set forth below, the Debtors expect to have sufficient funds to administer 
and consummate the Amended Plan, including funding all payments required under the Amended 
Plan, and proceed with an orderly wind down of these Chapter 11 Cases. 
i. 
Estimated Remaining Cash Sources 
20. 
As of March 31, 2023—the Debtors’ illustrative Effective Date— the value 
of the Debtors’ remaining cash sources is estimated to be approximately $17.9 million, including 
$15.3 million in cash on hand.8   
ESTIMATED SOURCES  
AMOUNT 
Cash Balance Estimate as of March 31, 2023 
$15.3 million 
Restricted Cash 
$2.1 million 
Residual Legacy Loan Agency Collections 
$0.5 million 
TOTAL SOURCES:  
$17.9 million 
 
8 The estimated sources are conservative and do not include proceeds from a potential sale of residual Legacy Loan 
assets or remaining amounts due to the Debtors pursuant to the Order (I) Authorizing and Approving the Settlement 
Agreement Between KServicing and Customers Bank and (II) Granting Related Relief (Docket No. 232). 
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B. 
Estimated Uses of Funds  
i. 
Uses of Funds 
21. 
The Debtors project wind down expenses of approximately $13.2 million, 
including remaining pre-Effective Date operating expenses and restructuring professionals’ fees, 
other non-operating expenses (including taxes, insurance, U.S. Trustee fees, contract cures, Wind 
Down Officer related costs, and litigation advisor and related costs), wind down contingency 
reserves, litigation reserves, and claims reserves.  By implementing, among other things, an 
appropriate cash reserve system, the Debtors have thus ensured that they will maintain adequate 
cash levels to effectuate the wind down.   
22. 
The Debtors project wind down expenses of approximately $13.2 million, 
including remaining operating expenses, professional fees, other non-operating expenses 
(including taxes, insurance, U.S. Trustee fees, contract cures, Wind Down Officer related costs, 
and litigation advisor and related costs), wind down contingency reserves, and litigation reserves. 
ESTIMATED USES OF FUNDS 
AMOUNT 
Operating Expenses 
$2.8 million 
Professional Fees 9 
$2.6 million 
Other Non-Operating Expenses 
$4.3 million 
Wind Down Reserves 10 
$2.0 million 
Litigation Reserves 11 
$1.5 million 
TOTAL USES:  
$13.2 million 
 
9  Includes fees for post-effective date restructuring and ordinary course professionals. 
10 Wind Down Reserves includes contingent amounts to cover unforeseen costs associated with the wind down of the 
business, including but not limited to payroll, tax liabilities and legal expenses. 
11 Litigation Reserves includes contingent amounts to cover unforeseen costs of pursuing Causes of Action. 
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ii. 
Estimated Outstanding SAP Claims 
23. 
The Debtors estimate that the total amount of Outstanding SAP Claims that 
need to be reserved for or paid on the Effective Date will be approximately $2.1 million, consisting 
of the following:  
ESTIMATED OUTSTANDING SAP CLAIMS 
AMOUNT 
Other Secured Claims 
$2.1 million 
Administrative Expense Claims  
$15,000 
TOTAL CLAIMS:  
$2.1 million 
 
24. 
This leaves the Debtors’ estates with approximately $2.6 million, which I 
believe is more than sufficient to satisfy any other contingencies that may arise.  As with any 
projections, there is a possibility that there may be some variance in the Wind Down Budget and 
expenses.  To account for the potential variance, the Wind Down Budget includes certain 
contingency reserve amounts.  I believe that the budget surplus could be as high as $6.1 million if 
the Company does not use the budgeted $3.5 million of Wind Down and Litigation Reserves.  I 
believe the estimated Remaining Cash Sources will be sufficient to cover any additional 
unforeseen costs of winding down the business. The Wind Down Budget was discussed with, and 
revised, based on discussions with the Reserve Bank’s advisors.   
25. 
The Amended Plan establishes and appoints a post-Effective Date fiduciary 
to carry out the Amended Plan and complete the Wind Down of the Debtors’ estates.  The 
Amended Plan provides that the Wind Down Officer will complete the claims reconciliation 
process and monetize any remaining non-cash assets of the Debtors (including any Causes of 
Action).  The Amended Plan and the various agreements contained in the Plan Supplements, 
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among other things, outline the rights, duties, and powers of the Wind Down Officer and reflect 
the reserved amounts in the Wind Down Budget for Wind Down Officer related fees.   
C. 
Conditions Precedent to the Effective Date 
26. 
In the illustrative scenario where the Debtors’ Effective Date occurs on 
March 31, 2023, the Debtors have $15.3 million in cash, exclusive of restricted cash. Due to the 
limited funds available to the Debtors, it is necessary for the Debtors to be deliberate in causing 
any potential delays to the Effective Date.  As such, the Debtors continue to remain focused on an 
efficient transfer of the loan servicing obligations, and for the avoidance of any doubt, all parties 
understand that any transfer costs are to be paid by the applicable counterparties. As discussed in 
the Declaration of Laquisha Milner in Support of Confirmation of the Amended Joint Chapter 11 
Plan of Liquidation of Kabbage, Inc. (d/b/a KServicing) and its Affiliated Debtors, the Debtors are 
expected to meet all conditions precedent under Section 9.1 of the Amended Plan—including the 
transfer of servicing the PPPLF Collateral to an alternate third party servicer to the satisfaction of 
the Reserve Bank.      
 
 
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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 
New York, New York  
 
 
 
 
 
 
 
 
 
/s/ Deborah Rieger-Paganis  
 
 
 
 
 
 
 
 
Name: Deborah Rieger-Paganis 
 
 
 
 
 
 
 
Title: Managing Director, AlixPartners, LLP  
 
 
 
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