November 18th Letter
- Date
- 2022-11-29
Summary
Exhibit 1, filed November 29, 2022 as Doc 299-1 in Case No. 22-10951-CTG in the U.S. Bankruptcy Court for the District of Delaware, is a November 18, 2022 letter from Richard Slack of Weil, counsel to Kabbage, Inc. d/b/a KServicing, to Jeremy M. Sternberg of Holland & Knight. The letter responds to a November 17, 2022 letter sent on behalf of Customers Bank giving notice of breach of the Settlement and Release Agreement dated October 27, 2022, approved by order on November 9, 2022 [Docket No. 232]. It disputes that the Company is in breach, argues its obligations could not begin before court approval, and states that the parties met as scheduled on November 18, 2022. It asserts that Customers Bank continues to withhold the balance of the Settlement Payment and reserves the Company's rights.
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Case 22-10951-CTG Doc 299-1 Filed 11/29/22 Page 1 of 3
EXHIBIT 1
November 18th Letter
RLF1 28284438v.1
Case 22-10951-CTG Doc 299-1 Filed 11/29/22 Page 2 of 3
CONFIDENTIAL 767 Fifth Avenue
New York, NY 10153-0119
Via Electronic Mail +1 212 310 8000 tel
+1 212 310 8007 fax
Richard Slack
+1 (212) 310-8017
November 18, 2022 richard.slack@weil.com
Jeremy M. Sternberg
Holland & Knight
10 St. James Avenue
Boston, MA 02116
Re: Notice of Breach of Settlement and Release Agreement
Dear Mr. Sternberg:
We are in receipt of your letter dated November 17, 2022 (the “Letter”), sent on behalf of Customers Bank
(“CUBI”). We disagree that Kabbage, Inc. d/b/a KServicing (the “Company”) is in breach of the Settlement and
Release Agreement, dated October 27, 2022 (the “Settlement Agreement”), which was approved by order of the
United States Bankruptcy Court for the District of Delaware on November 9, 2022 [Docket No. 232] (the
“Settlement Agreement Order”). Indeed, as you are well aware from the correspondence sent by Weil, as counsel
to the Company, to your attention on Monday, November 14, 2022, CUBI is in contempt of the Settlement
Agreement Order for, among other things, its failure to remit the full Settlement Payment.
The Company disagrees with the assertions in your letter. We note the following:
First, the Letter appears to assert that the timing of the Company’s obligations under Paragraph 4 of the
Settlement Agreement were to commence before the Bankruptcy Court entered the Settlement Agreement Order.
Your attention is directed to paragraph 7 of the Settlement Agreement which expressly provides that the agreement
is subject to approval by the Bankruptcy Court. CUBI’s attempt to arbitrarily impose retroactive obligations on the
Company for the month of October 2022, prior to the entry of the Settlement Agreement Order, is inappropriate
and incorrect. By way of example, the Notice of Breach states that the Company has failed to produce the
“(1) Monthly Borrower Remittance Reports that are due “within 5 business days of the close of each month’”; and
if CUBI’s interpretation of the Settlement Agreement were applied that would mean the Company was obligated to
have produced such report by November 7, 2022, which is the day the Bankruptcy Court heard the motion to
approve the Settlement Agreement. Accordingly, CUBI’s position that certain obligations began before the
Settlement Agreement was approved would lead to an absurd result.
Second, the Letter asserts that the Company has unilaterally canceled every meeting that was scheduled
with CUBI during the week of November 14th. The Company and CUBI met as scheduled on Friday, November
18, 2022 at 1:00 (Eastern Time). Further, although the Service Plan only requires a weekly meeting, please note
that the Company has previously made itself available to CUBI four times a week on Tuesdays at 3:00pm (Eastern
Time), Wednesdays at 9:00am (Eastern Time) and 11:30 am (Eastern Time) and on Fridays at 1:00pm (Eastern
Time). It is thus contrary to the facts for you to state that the Company has canceled all meetings.
WEIL:\98904939\3\55894.0004
Case 22-10951-CTG Doc 299-1 Filed 11/29/22 Page 3 of 3
November 18, 2022
Page 2
It is evident by the nature and content of the Letter that CUBI is attempting to manufacture breaches by the
Company to camouflage its own wrongdoing of continuing to withhold from the Company the balance due of the
Settlement Payment. Notwithstanding the language of the Settlement Agreement and the parties’ understanding, we
can confirm that as of the date hereof the Company has remitted to CUBI postpetition amounts that were collected
through October 31, 2022 and all applicable Servicing Plan Reports. 1 The Company has chosen to continue, at this
time, to adhere to the Settlement Agreement despite CUBI’s existing and continuing material breach.
All of the Company’s rights, remedies, claims, and defenses are fully reserved in all respects.
Sincerely,
/s/ Richard Slack
Richard Slack
cc (via e-mail): Ray C. Schrock, P.C. (Weil, Gotshal & Manges LLP)
Theodore Tsekerides (Weil, Gotshal & Manges LLP)
Candace M. Arthur (Weil, Gotshal & Manges LLP)
John Monagahn (Holland & Knight LLP)
1
Of note, the October Remittance Report could not have been uploaded after November 10th due to an error on CUBI’s system
with respect to verification of its host key. The Company informed CUBI of the error and it was resolved on November 18,
2022.
WEIL:\98904939\3\55894.0004
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- gov.uscourts.deb.188293.299.1.pdf
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- Original
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