Kabbage - COC re Third Interim Cash Management Order, Doc. 261-1 — In re KServicing Wind Down Corp., et al.
- Date
- 2022-11-18
Summary
Doc 261-1, filed November 18, 2022 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, is Exhibit 1, a proposed Third Interim Order on the debtors' cash management motion dated October 3, 2022. The order grants the motion on a further interim basis, following interim orders entered October 6, 2022 and November 2, 2022, and authorizes the debtors to keep using their existing Cash Management System, bank accounts and business forms. It addresses bank fees, account openings and closings with notice to the U.S. Trustee, Uniform Depository Agreements, and segregation of PPPLF Collateral proceeds for the Reserve Bank. It suspends section 345(b) requirements through January 26, 2023 and sets the final hearing for January 19, 2023. The exhibit is 8 pages.
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Case 22-10951-CTG Doc 261-1 Filed 11/18/22 Page 1 of 8
Exhibit 1
Third Interim Order
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
------------------------------------------------------------ x
In re : Chapter 11
:
KABBAGE INC. d/b/a KSERVICING, et al., : Case No. 22-10951 (CTG)
:
:
1
Debtors. : (Jointly Administered)
:
: Ref. Docket No. 12, 78 & 195
------------------------------------------------------------ x
THIRD INTERIM ORDER (I) AUTHORIZING (A) DEBTORS TO CONTINUE
USING EXISTING CASH MANAGEMENT SYSTEM, BANK ACCOUNTS, AND
BUSINESS FORMS, (B) IMPLEMENT CHANGES TO CASH MANAGEMENT IN THE
ORDINARY COURSE OF BUSINESS; AND (II) GRANTING RELATED RELIEF
Upon the motion, dated October 3, 2022 (the “Motion”),2 of Kabbage, Inc. d/b/a/
KServicing and its debtor affiliates, as debtors and debtors in possession in the Chapter 11 Cases
(collectively, the “Debtors”), for entry of an order pursuant to sections 105, 345, and 363 of the
Bankruptcy Code, Bankruptcy Rules 6003 and 6004, and Local Rule 2015-2 (a) authorizing the
Debtors to (i) continue using their existing Cash Management System and business forms and
(ii) honor certain obligations related to the Cash Management System, (b) extending the time to
comply with certain requirements of section 345(b) of the Bankruptcy Code, and (iii) granting
related relief, all as more fully set forth in the Motion; and upon consideration of the Rieger-
Paganis Declaration; and this Court having jurisdiction to consider the Motion and the relief
requested therein pursuant to 28 U.S.C. §§ 157 and 1334, and the Amended Standing Order of
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 but not otherwise defined herein shall have the respective meanings ascribed to such terms
in the Motion.
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Reference entered by the United States District Court for the District of Delaware, dated February
29, 2012; and consideration of the Motion and the requested relief being a core proceeding
pursuant to 28 U.S.C. § 157(b); and venue being proper before this Court pursuant to 28 U.S.C.
§§ 1408 and 1409; and due and proper notice of the Motion having been provided; and such notice
having been adequate and appropriate under the circumstances, and it appearing that no other or
further notice need be provided; and this Court having reviewed the Motion and having entered an
initial interim order approving the Motion on October 6, 2022 [Docket No. 78]; and this Court
having held a hearing to consider the interim relief requested in the Motion on October 6, 2022
(the “Interim Hearing”); and this Court having entered a second interim order approving the
Motion on November 2, 2022 [Docket No. 195]; and upon the record of the Interim Hearing; and
this Court having determined that the legal and factual bases set forth in the Motion establish just
cause for the relief granted herein; and upon all of the proceedings had before this Court and after
due deliberation and sufficient cause appearing therefor,
IT IS HEREBY ORDERED THAT
1. The Motion is granted on a further interim basis to the extent set forth
herein.
2. The Debtors are authorized, but not directed, pursuant to sections 105(a)
and 363 of the Bankruptcy Code to continue to manage their cash pursuant to the Cash
Management System maintained prior to the Petition Date, to collect, concentrate, and disburse
cash in accordance with the Cash Management System and to make ordinary course changes to
their Cash Management System, absent further order of this Court, as consistent with this Order
2
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(this “Third Interim Order”).3
3. The Debtors are authorized, but not directed, to (i) designate, maintain, and
continue to use their existing Bank Accounts, in the names and with the account numbers existing
immediately before the Petition Date, (ii) deposit funds in, and withdraw funds from, such Bank
Accounts by all usual means, including checks, wire transfers, ACH transfers, and other debits;
except to the extent the Reserve Bank directs the Debtors to segregate proceeds of the PPPLF
Collateral into a custodial account, (iii) pay any Bank Fees or other charges associated with the
Bank Accounts, whether arising before or after the Petition Date, (iv) otherwise perform their
obligations under the documents governing the Bank Accounts, and (v) treat their prepetition Bank
Accounts for all purposes as debtor-in-possession accounts.
4. The Debtors are authorized to pay all service charges for the maintenance
of the Cash Management System owed to any Bank, including any Bank Fees incurred in the
ordinary course of business, whether arising before or after the Petition Date.
5. Notwithstanding any other provision in this Third Interim Order, should a
Bank honor a prepetition check or other item drawn on any account that is the subject of this Third
Interim Order (i) at the direction of the Debtors to honor such prepetition check or item or (ii) in
good faith belief that this Court has authorized such prepetition check or item to be honored, the
Bank shall not be deemed to be nor shall be liable to the Debtors or their estates or otherwise be
in violation of this Third Interim Order. Without limiting the foregoing, the Banks may rely on
the representations of the Debtors with respect to whether any check or other payment order drawn
or issued by a Debtor prior to the Petition Date should be honored pursuant to this or any other
3
Notwithstanding the foregoing, no change shall be made to the management of the PPPLF Loans payments and
account without prior written consent by the Reserve Bank, absent entry of an order of the Court after notice and an
opportunity to be heard.
3
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order of this Court, and shall not have any liability to any party for relying on such representations
by a Debtor as provided for herein.
6. The Banks are authorized to receive, process, honor, and pay any and all
checks issued, or to be issued, and electronic funds transfers requested, or to be requested, by the
Debtors relating to payment of the obligations described in the Motion, to the extent that sufficient
funds are on deposit and standing in the Debtors’ credit in the applicable Bank Account to cover
such payments.
7. Nothing contained herein shall prevent the Debtors from closing any of their
Bank Account(s) in the ordinary course of business and in accordance with prepetition practices
as they may deem necessary and appropriate. The Banks are authorized to honor the Debtors’
requests to close such Bank Accounts, and the Debtors shall give notice of the closure of any such
Bank Account to the U.S. Trustee and any statutory committee within 15 days of such closure.
8. The Debtors are authorized to open any new Bank Accounts as they may
deem necessary and appropriate in their sole discretion; provided, however, that the Debtors give
notice within 15 days of opening such new account to the U.S. Trustee and any statutory committee
appointed in these chapter 11 cases; provided, further, that the Debtors shall open any new Bank
Account at a bank that has executed a Uniform Depository Agreement with the U.S. Trustee or at
a bank that is willing to immediately execute such an agreement except to the extent that such new
Bank Account must be opened at a correspondent bank in order to continue to maintain a
correspondent bank account as required by the Reserve Bank.
9. The Debtors are authorized to continue the Corporate Credit Card Program
in the ordinary course, to perform their obligations under the Corporate Credit Card Program, and
to pay outstanding prepetition expenses arising thereunder.
4
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10. The Debtors shall maintain accurate records of all transfers within the Cash
Management System so that all post-petition transfers and transactions shall be adequately and
promptly documented in, and readily ascertainable from, their books and records.
11. The Debtors are authorized to use their business forms, including checks,
without alteration and without the designation “debtor in possession” imprinted upon them;
provided, that, once the Debtors’ existing check stock has been used, the Debtors shall use
reasonable efforts, when reordering checks, to include the designation “Debtor in Possession” and
the jointly administered bankruptcy case number on such checks.
12. The Debtors are authorized, but not directed, to issue new post-petition
checks, or effect new electronic funds transfers, and to replace any prepetition checks or electronic
fund transfer requests that may be lost or dishonored or rejected as a result of the commencement
of the Debtors’ Chapter 11 Cases with respect to any prepetition amounts that are authorized to be
paid pursuant to this Third Interim Order or any other order of this Court.
13. For Banks at which the Debtors hold accounts that are not party to a
Uniform Depository Agreement with the U.S. Trustee, the Debtors shall use their good-faith
efforts to cause the Banks to execute a Uniform Depository Agreement in a form prescribed by the
U.S. Trustee. The U.S. Trustee’s rights to seek further relief from this Court on notice in the event
that the aforementioned Banks are unwilling to execute a Uniform Depository Agreement in a
form prescribed by the U.S. Trustee are fully reserved.
14. The requirements provided in section 345(b) of the Bankruptcy Code are
hereby suspended as to the Bank Accounts through and including January 26, 2023 (the “Section
345 Deadline”). The Section 345 Deadline may be further extended by agreement of the U.S.
5
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Trustee and the Debtors without further order of the Court or, in the absence of such agreement,
entry of an order further extending such deadline.
15. The Debtors are authorized to continue all efforts related to replacement of
the Primis Account in the ordinary course as they had commenced prior to the Petition Date
without need for any further order or authority from this Court.
16. The Debtors are authorized to continue all efforts related to processing of
the SBA Direct-Reserve Payments in the ordinary course as they had done prior to the Petition
Date without need for any further order or authority from this Court.
17. Notwithstanding the historical nature of the remittance of proceeds by the
Debtors, nothing herein shall limit the Debtors’ duty to remit the full amount of proceeds of the
PPPLF Loans constituting PPPLF Collateral to the Reserve Bank, which is governed by the PPPLF
Program Agreements; provided, that the Debtors reserve their rights with respect to whether
certain proceeds constitute PPPLF Collateral and all rights and defenses thereto are preserved,
solely to the extent provided in the Order Under 11 U.S.C. §§ 105, 361, 362, and 363, and
Bankruptcy Rules 2002, 4001, 6004, and 9014 (I) Authorizing Debtors to Use Cash Collateral and
(II) Granting Adequate Protection to Secured Lender [Docket No. 225].
18. Notwithstanding historical practices, the Debtors will segregate all proceeds
of the PPPLF Loans that constitute PPPLF Collateral that the Debtors receive in the Synovus
Servicing Account for the sole benefit of the Reserve Bank; provided, that to extent that the
Company receives any borrower collections on account of KS PPP Loans through the Synovus
Servicing Account such funds shall be promptly segregated from any proceeds of the PPPLF
Collateral.
6
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19. Despite the use of a consolidated cash management system, the Debtors
shall calculate quarterly fees under section 28 U.S.C. section 1930(a)(6) based on the
disbursements of each Debtor, regardless of who pays those disbursements.
20. Notice of the Motion is adequate under Bankruptcy Rule 6004(a).
21. Notwithstanding the provisions of Bankruptcy Rule 6004(h), this Third
Interim Order shall be immediately effective and enforceable upon its entry.
22. The Debtors are authorized to take all actions necessary or appropriate to
effectuate the relief granted in this Third Interim Order.
23. This Court shall retain jurisdiction to hear and determine all matters arising
from or related to the implementation, interpretation, or enforcement of this Further Interim Order.
24. The Final Hearing to consider the relief requested in the Motion shall be
held on January 19, 2023 at 10:00 a.m. (Prevailing Eastern Time), and any objections or
responses to the Motion shall be in writing, filed with the Court, and served on or prior to October
31, 2022 at 4:00 p.m. (Prevailing Eastern Time) (as such deadline may be extended by the
Debtors).
7
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