In re Kabbage, Inc. d/b/a KServicing — Transcript of November 29, 2022 Status Conference
- Date
- 2022-12-07
Summary
Doc 336-3 in In re Kabbage, Inc., d/b/a KServicing, et al., Case No. 22-10951(CTG), filed December 7, 2022 in the U.S. Bankruptcy Court for the District of Delaware and marked Exhibit B, is the transcript of a November 29, 2022 video status conference before Judge Craig T. Goldblatt. Debtors' counsel from Weil, Gotshal & Manges describe a pending dispute with Customers Bank involving approximately $3.7 million and state that the debtors seek no relief that day. Counsel propose filing a motion, with a response date of December 21st, a reply on January 3rd and a hearing on January 6th, and the court states it has no objection to proceeding by motion if the parties agree. Counsel for Customers Bank and for class action members also address the court. The conference ran from 1:30 p.m. to 1:54 p.m.
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
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 1 of 23
EXHIBIT B
TRANSCRIPT
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 2 of 23
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
. Chapter 11
IN RE: .
. Case No. 22-10951(CTG)
KABBAGE, INC., d/b/a .
KSERVICING, et al, .
. 824 Market Street
. Wilmington, Delaware 19801
Debtors. .
. . . . . . . . . . . . . . . Tuesday, November 29, 2022
TRANSCRIPT OF VIDEO HEARING RE:
STATUS CONFERENCE
BEFORE THE HONORABLE CRAIG T. GOLDBLATT
UNITED STATES BANKRUPTCY JUDGE
APPEARANCES:
For the Debtors: Daniel J. DeFranceschi, Esq.
Amanda R. Steele, Esq.
Zachary I . Shapiro, Esq.
Matthew P. Milana, Esq.
Huiqi (Vicki) Liu, Esq.
RICHARDS, LAYTON & FINGER, PA
Ray C. Schrock, P.C.
Candace M. Arthur, Esq.
Chase A. Bentley, Esq.
Theodore Tsekerides, Esq.
Richard Slack, Esq.
WEIL, GOTSHAL & MANGES, LLP
For the U.S. Trustee: Rosa Sierra-Fox, Esq.
OFFICE OF THE U.S. TRUSTEE
(Appearances Continued)
Audio Operator: Electronically Recorded
by Donna Capell, ECRO
Transcription Company: Reliable
1007 N. Orange Street
Wilmington, Delaware 19801
(302)654-8080
Email: gmatthews@reliable-co.com
Proceedings recorded by electronic sound recording,
transcript produced by transcription service.
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 3 of 23
APPEARANCES VIA ZOOM: (Continued)
For Customers Bank: William Hazeltine, Esq.
SULLIVAN HAZELTINE ALLINSON, LLC
John Monaghan, Esq.
Jeremy Sternberg, Esq.
HOLLAND & KNIGHT, LLP
For American Express: Jonathan Weyand, Esq.
MORRIS, NICHOLS, ARSHT
& TUNNELL, LLP
Dolan Bortner, Esq.
James Bromley, Esq.
SULLIVAN & CROMWELL, LLP
For the United States: Alastair Gesmundo, Esq.
Stanton McManus, Esq.
U.S. DEPARTMENT OF JUSTICE
For Federal Reserve Bank
of San Francisco: Heather Smillie, Esq.
Pauline Morgan, Esq.
Ryan Bartley, Esq.
Sean Greecher, Esq.
Kristin Corbett, Esq.
Lisa Schweitzer, Esq.
Richard Minott, Esq.
CLEARY, GOTTLIEB, STEEN
& HAMILTON, LLP
For Board of Directors: David Kurzweil, Esq.
Matthew Petrie, Esq.
GREENBERG TRAURIG, LLP
For Cross River Bank: Gregory Werkheiser, Esq.
BENESCH, FRIEDLANDER, COPLAN
& ARONOFF, LLP
Matthew Scheck, Esq.
QUINN EMANUEL URQUHART
& SULLIVAN, LLP
For Synovus Bank: David Wender, Esq.
EVERSHEDS SUTHERLAND
(Appearances Continued)
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 4 of 23
APPEARANCES VIA ZOOM: (Continued)
For Class Action
Members: Marybeth Gibson, Esq.
THE FINLEY FIRM
For Morgan Franklin and
Vaco Resources: Jay Bender, Esq.
BRADLEY, LLP
Also Appearing: Marc Sullivan
KS MANAGEMENT
Kyle Mason
"DEBTORS"
Christine Nell
SMALL BUSINESS ADMINISTRATION
Cathy Ta
REORG
Taylor Harrison
DEBTWIRE
Becky Yerak
WALL STREET JOURNAL
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 5 of 23
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1 (Proceedings commence at 1:30 p.m.)
2 THE COURT: Good afternoon, all. This is Judge
3 Goldblatt. We are now on the record in In Re Kabbage, which
4 is Case Number 22-10951.
5 We're proceeding this afternoon by Zoom, the usual
6 Zoom rules apply. Please leave your microphones muted unless
7 you're addressing the Court. Please introduce yourself for
8 the record each time you address the Court. And finally, my
9 own preference is that folks generally leave their cameras
10 off unless you, either are addressing the Court, or wish to
11 be recognized, mostly because I find it helpful, if someone
12 turns their camera on, as a way to signal that they want to
13 be recognized.
14 So, with that, we're here on a status conference
15 with respect to a dispute that's arisen. Why don't I allow
16 counsel for the debtor, who's sought the conference, to kick
17 off.
18 MS. ARTHUR: Thank you, Your Honor. For the
19 record, Candace Arthur of Weil, Gotshal & Manges on behalf of
20 the debtors.
21 I would like to thank the Court for providing the
22 time this afternoon for this status conference. As we
23 reflected in the amended agenda that was filed, both parties
24 have submitted letters in connection with the dispute.
25 And I would also like to note that we did
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5
1 supplement the record about an hour ago, for completeness, by
2 filing the debtors' response to the notice of breach that
3 Customers Bank referenced in their letter, and they mentioned
4 it wasn't filed because it was marked as confidential. So
5 that has also been filed on the docket, Your Honor.
6 Your Honor, I -- the debtors are not seeking any
7 relief from the Court today. But in furtherance of
8 transparency and just given the importance of the settlement
9 reached with Customers Bank to the debtors' estate, we felt
10 it was appropriate to provide the Court and other
11 stakeholders with an update, so that everyone is aware of the
12 pending dispute.
13 I do want to make it clear, Your Honor, that this
14 dispute, which you may have surmised involves approximately
15 $3.7 million, that this dispute does not affect the
16 feasibility of the debtors' proposed path forward. However,
17 Customer Bank's obligation to remit funds to the debtors is
18 material, and that was evidenced by the contested nature of a
19 9019 motion heard earlier this month.
20 Your Honor, I will turn to my partner Richard Slack
21 to better inform you of the issue we're facing and our
22 proposal for moving forward enforcing a court order, to the
23 extent the debtors do not receive the balance owed.
24 But again, I would like to thank the Court for its
25 time.
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1 THE COURT: Okay, Ms. Arthur. Thank you.
2 Obviously, happy to do my job and make myself available when
3 there's a dispute I need -- that needs resolution.
4 Mr. Slack, I've read the letters, including the
5 supplemental submission that came in about an hour ago. I'm
6 happy to let you present whatever you'd like, but to the
7 extent it's helpful, at this stage, I'm not primarily
8 interested in having each side preview the merits of their
9 positions and explain why the fact that we're having a
10 dispute is all the other side's fault. You've all did --
11 you've all done that very well in your letters. I'm mostly
12 interested in hearing thoughts on what we can do to be
13 helpful to create an expeditious and appropriate mechanism
14 for bringing the matters to resolution.
15 So, with that, Mr. Slack, let me pass it to you.
16 MR. SLACK: Thank you, Your Honor. Richard Slack
17 from Weil Gotshal, also for Kabbage.
18 And Your Honor, given what you just said, I won't
19 go into the background, you know, I think other than to
20 briefly say that, obviously, as our letter said, Kabbage's
21 position is that, you know, we're owed 23.7 million, we were
22 only paid approximately 20.5. And we're looking forward to
23 have this issue decided.
24 Two things which I think still make some sense to
25 do, Your Honor, just because we had sort of said we would do
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1 this in our letters, is, again, for transparency purposes, to
2 let both the Court and, you know, the parties know what we're
3 thinking, in terms of scheduling.
4 And that is that, currently, we're intending to
5 file our motion the beginning of next week;
6 That we would have the response date on December
7 21st, before Christmas.
8 We would have the reply on January 3rd.
9 And I believe Your Honor has a hearing available on
10 January 6th.
11 I think the schedule that we're proposing shows how
12 important this is, and that I think, you know, we're getting
13 sort of the short end of the stick on the reply, given that
14 we're going to have two holiday weekends in order to do that.
15 But it is an important issue for us, so that's the schedule
16 that we would propose.
17 THE COURT: Okay. So --
18 MR. SLACK: That's really the first --
19 THE COURT: Let me --
20 MR. SLACK: -- the first point.
21 THE COURT: Let me just --
22 MR. SLACK: Yeah.
23 THE COURT: -- say the following briefly, Mr.
24 Slack, not to interrupt.
25 But it -- both parties here have suggested that we
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1 proceed by way of motion. That's fine with me, if both
2 parties agree. You know, if one were being hardheaded about
3 the rules, one would say this is an attempt to recover money
4 damages that the rules would say require an adversary. If
5 both parties consent to proceeding by motion because it just
6 makes sense to do it that way, I'm not standing in the way.
7 To the extent any party wants to enforce the right -- I don't
8 know why they would -- to get a piece of paper with a
9 different caption on it, you know, I -- you know, I'm happy
10 to hear you explain why you think that's more appropriate.
11 But to the extent the parties agree to proceed by motion --
12 and it appears from the letters that they do -- I've got no
13 problem with that.
14 So apologies for interrupting, Mr. Slack. Let me
15 let you continue.
16 MR. SLACK: No, in fact, I want to -- I -- you
17 know, we clearly think that this is appropriate by motion,
18 whether it just is going to be appropriate (indiscernible)
19 just as a matter of form over substance, it makes sense to do
20 it that way. So we clearly both think it's the right way and
21 consent (indiscernible) look at that way, you know,
22 otherwise. So I'll say that.
23 The second point, Your Honor, that I want to make,
24 which is a little bit different -- I know we've submitted
25 letters. But there is one point in the letter that was
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 10 of 23
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1 submitted that, you know, we hadn't -- we haven't responded
2 to and it wasn't actually a response to anything in our
3 letter. And that's that second piece, where Customers
4 complains about an amount of a remittance payment for
5 October. That wasn't anything in our letter. Really, it has
6 nothing to do with the payment issues for us.
7 But I do want to make a point. You know, people
8 pay attention to what's filed, obviously. You know, there
9 are people picking it up. So I think it's important, you
10 know, that something like this gets responded to at least a
11 little bit.
12 And you know, first off, with respect to this
13 376,000 payment that they say they're owed, they say they're
14 -- you know, the only -- they don't have any basis for saying
15 they think they're owed more, other than in past times, past
16 months, the payment has been a million and a half; and that
17 the letter doesn't provide any information why the three
18 seventy-six is not the right number. And it implies there's
19 something wrong, but it doesn't say anything.
20 And then the letter suggests that Customers doesn't
21 know the underlying basis -- the underlying reason why the
22 payment was three seventy-six. And the fact is, is that
23 Customers knows precisely why the payment was made in the
24 amount it was made.
25 And you know, at 11 a.m. yesterday, before
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 11 of 23
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1 Customers sent a letter to the Court, Customers sent an email
2 to KServicing that sets out the precise reason why the
3 payment was three seventy-six. This is a Customers email.
4 And Customers -- and that email said specifically that it
5 appears that the SBA payments were netted out.
6 Now I know the Court doesn't know what that means.
7 But briefly, what that means is that the deviation from the
8 payment from prior months is because, in October, the SBA
9 agreed to guarantee a whole chunk of loans. And when that
10 happened, payments that were made by borrowers were owed to
11 the SBA. That's at least the SBA's position, since they were
12 guaranteeing those loans.
13 And so, putting aside the merits of the issue
14 because that's not really the point I'm making. The point is
15 Customers knew precisely what the issue was before they sent
16 their letter. And it's -- you know, it's curious why a
17 letter like that sent when they know what the issue is and
18 they know that the SBA, you know, had -- you know, had -- the
19 payments were to the SBA and what the SBA's position is.
20 So, again, that -- I made that point only because I
21 think the -- that was not something that our letter raised
22 and wasn't something we responded to. And it was something,
23 I think, that the public and the people here have to
24 understand, you know, there's a response to these things.
25 So, with that, Your Honor, unless you have any
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 12 of 23
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1 other questions, you know, I -- you know, I guess, if
2 Customers has something they want to say, we'd turn it over
3 to them.
4 THE COURT: Okay. Why don't I give Customers a
5 chance to be heard with respect to your proposed schedule?
6 (Participants confer)
7 MR. STERNBERG: Hello, Your Honor. This is Jeremy
8 Sternberg on behalf of -- from Holland & Knight on behalf of
9 Customers Bank, here with colleague John Monaghan. Can you
10 hear us?
11 THE COURT: I can hear you. You're -- though,
12 you're faint and you're in a conference room where you're all
13 the way at the other end from the camera, so I -- so you're
14 speck on the Zoom screen.
15 MR. STERNBERG: If I --
16 THE COURT: You know, I'm happy to be flexible.
17 It's not that big a deal, as long as I can hear you, but --
18 there --
19 MR. STERNBERG: Yeah, our --
20 THE COURT: I think that's better.
21 MR. STERNBERG: Our Zooming is not working on the
22 camera. So, as you come closer to the camera and closer to
23 the microphone -- again, it's Jeremy Sternberg --
24 THE COURT: Okay.
25 MR. STERNBERG: -- Holland & Knight on behalf of
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1 (indiscernible) I'm here with my colleague John Monaghan.
2 The schedule Mr. Slack proposed is agreeable to the
3 bank, both on the motion that KServicing intends to file and
4 on the motion to compel performance of the settlement
5 agreement with respect to KServicing's trust segregation and
6 payment obligations. So we would propose that the -- each
7 side files motions and we adhere to the same schedule for
8 both.
9 And with respect to Mr. Slack's comments about the
10 substance of that issue, the bank is now aware of why
11 KServicing shorted the payment and doesn't agree with it.
12 KServicing is obligated to pay every dollar that comes into
13 that account into the segregated account and hold it in trust
14 and pay it over to Customers Bank after the petition date.
15 And our understanding from the information we've gotten from
16 KServicing is that they did not do so. They, in fact, paid
17 some money to the SBA.
18 And that is -- we're obviously going to dig more
19 into that. But there is a history here of KServicing not
20 honoring its trust obligations under a previous agreement and
21 using the bank's money to fund its operations. We believe
22 that's happening again and we will be filing a motion, if the
23 Court allows it, on the same schedule that KServicing wants
24 to have on its motion.
25 THE COURT: Okay.
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1 MR. STERNBERG: And I'd also note, Your Honor, that
2 tomorrow is the close of another month, and that KServicing's
3 obligation to pay over funds will kick in again, and we are
4 concerned about being shorted again. That's why the
5 expedited schedule that Mr. Slack has proposed is very
6 agreeable to the bank.
7 THE COURT: Okay. So let me ask all -- I'm sorry.
8 So, Mr. Scheck, you just turned on your camera. Did you --
9 would you like to be heard?
10 MR. SCHECK: Yes, Your Honor. I'd like to be heard
11 if now is a good time.
12 THE COURT: You can proceed.
13 MR. SCHECK: Okay. Thank you, Your Honor. Matthew
14 Scheck from Quinn Emanuel on behalf of Cross River Bank.
15 And we -- you know, Mr. Slack mentioned parties
16 reading what's on the docket and being interested in what is
17 on the docket, and I guess we are one of those parties,
18 certainly.
19 As Your Honor knows, we objected to the settlement
20 when it was touted repeatedly as bringing in more than $23
21 million into the estate. We're certainly troubled that not a
22 word was said at the hearing that the number could be
23 materially different. We understand reconciliation of a
24 couple hundred thousand dollars; I don't think any of us
25 would be here. But this is a significant difference. We
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1 don't believe that this is the settlement that was approved.
2 And I know the parties are going to hash that out.
3 I guess one comment on that, though, is that we
4 believe, to the extent the parties ultimately reach a
5 resolution during this process, that it should not play out
6 entirely behind closed doors, but should be the subject of
7 being in front of the Court and have court approval of that
8 because this, in our view, is not the settlement that was
9 approved, to the extent it ends up being a resolution of $19
10 million or something else. So we would just say that should
11 be not done exclusively behind closed doors if it's somehow
12 resolved during this litigation process.
13 THE COURT: Okay. Mister --
14 MR. SCHECK: (indiscernible)
15 THE COURT: Mr. Slack, let me just ask you. Is
16 there any reason why, if the resolute -- if -- let me say the
17 following:
18 If I resolve the motion, that solves your concerns,
19 right, Mr. Scheck?
20 MR. SCHECK: I'm sorry --
21 THE COURT: If the parties --
22 MR. SCHECK: -- Your Honor?
23 THE COURT: -- present their positions and I
24 resolve it, nothing has happened behind closed doors, right?
25 If we have a hearing that doesn't concern you --
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1 MR. SCHECK: Correct, Your Honor.
2 THE COURT: And so your only concern is, to the
3 extent that there's a settlement of this dispute, that it's
4 subject to the 9019 procedure. That's your ask?
5 MR. SCHECK: Yeah, that it is, in some way -- and I
6 don't know, you know, formalistically [sic] speaking, how
7 important it is that it be subject to (indiscernible) notice
8 requirements, but that it is in some way transparent in the
9 process to stakeholders.
10 THE COURT: Okay. Mr. Slack, any objection to that
11 ask; that, to the extent you and Customers reach a
12 resolution, that the substance of that be disclosed?
13 MR. SLACK: I don't think disclosure is a problem,
14 Your Honor, you know, and I think transparency is important.
15 I would say, though, that, obviously, the
16 settlement agreement was not a precise number, and that was
17 public, everybody, you know, knew that that -- it wasn't a
18 precise number. We obviously think the number is more than
19 the 23.2 that we talked about in the -- at the hearing.
20 But putting that aside, there was a process and a
21 formula. And so, you know, I think -- I would certainly hope
22 that, during the course of this, when it became clear that
23 the number that Customers, you know, owes us is clear from
24 the documents and from the formula. You know, they -- you
25 know, the fact is, is that Customers essentially stopped the
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1 reconciliation process, right? They said, hey, the music
2 stopped, there's this reconciliation process, we don't have
3 to get it right, and really hope that, when they actually see
4 the numbers, they'll pay us the amount they owe us. I don't
5 think that's a settlement, even though I think that the
6 parties could have, as part of the reconciliation process,
7 reached a number.
8 But what I -- but I -- but that's a long way of
9 saying I think the transparency is important, in terms of
10 disclosure, and is, I think, different than maybe a 9019, so
11 we have no problem with that.
12 THE COURT: Okay. And Ms. Arthur?
13 MS. ARTHUR: Your Honor, I just wanted to echo for
14 the debtors and of course confirm for Mr. Scheck we
15 completely agree with you, in terms of transparency. We
16 completely agree that we will ensure that all stakeholders
17 are informed. And similarly, we believe that any difference
18 with -- in connection with what was requested for the 9019
19 motion was within a hundred -- a thousand dollars, at best,
20 and was not the material swing that has occurred. So we do
21 completely -- we're aligned, in terms of how the settlement
22 should have been viewed and should be viewed.
23 THE COURT: Okay. So, Mr. Slack, the suggestion
24 that Mr. Sternberg made is that there be essentially
25 simultaneous cross-motions.
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1 And I apologize, Mr. Scheck, if you hadn't finished
2 your point. I'll get back to you in a second. I apologize.
3 Mr. Slack, the suggestion that Mr. Sternberg made
4 was that there be simultaneous sort of cross-motions on the
5 schedule that you laid out. Do you have any objection to
6 proceeding that way?
7 MR. SLACK: Your Honor, we don't have any
8 objection.
9 I would say, though, that the issues here are not -
10 - what's the right way of saying -- they're not connected.
11 THE COURT: No, I appreciate --
12 MR. SLACK: (Indiscernible)
13 THE COURT: -- these are analytically distinct
14 questions. That said, you want o be heard in a hurry because
15 you think you're owed money and you want to get it, and they
16 take the same position. And it seems to me, at some level,
17 what's good for the goose is the controlling principle here.
18 So I'm more than happy, if the parties are prepared
19 to move quickly, to hear you quickly.
20 MR. SLACK: Okay.
21 THE COURT: So I just wanted to make sure that we
22 were in agreement that we were going to proceed that way.
23 And I take it what we're contemplating is you're
24 each going to submit papers. And to the extent there's
25 documentary evidence, you'll submit it with your papers. And
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 19 of 23
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1 if we've got a material factual dispute, we'll have an
2 evidentiary hearing where we'll get to the bottom of it. Is
3 that what's contemplated here?
4 MR. SLACK: So, Your Honor, with respect to our
5 dispute, I think that, you know, we certainly are going to
6 set out in our papers the reasons that we're entitled to the
7 23.7. And you know, if there is some kind of evidentiary
8 dispute, we'll be prepared to address that at the hearing.
9 So that -- from our perspective, I think that's correct.
10 THE COURT: Okay. And just to make sure we're all
11 rowing together. Mr. Sternberg, that's also consistent with
12 your understanding of what we've agreed to here?
13 MR. STERNBERG: It is, Your Honor.
14 THE COURT: Okay. So, Mr. Scheck, I'm sorry. I
15 cut you off very rudely, but let me let you continue your
16 point.
17 MR. SCHECK: No, no problem, Your Honor.
18 I think I just wanted to make -- a second point
19 was: It's not just the amount of the reconciliation that's
20 troubling. I think it's the reasons why there's a need for a
21 reconciliation. Customer Bank's assertions, if they're true,
22 are certainly troubling to Cross River Bank. And we don't
23 know if they're true, but they very well could be. And in
24 fact, Cross River has had issues with the debtors with
25 respect to reconciling remittances from borrowers.
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1 And this raises issues with whether the debtors are
2 remitting the proper amounts that they're holding in trust
3 for Cross River, as well. And frankly, it raises concerns
4 about the cash management system and leakage in the cash
5 management system. And so we may very well join in the
6 relief sought by Customers Bank or seek our own relief in
7 that same regard. And I just wanted to raise that point or
8 at least flag that issue.
9 THE COURT: Okay. Look, to the extent -- I'm --
10 you know, to the extent there's a concrete dispute that
11 requires resolution, that's -- I'm here to do my job. So,
12 you know, if such a motion needs to be brought, you know,
13 that's why we have a system for resolving disputes.
14 Ms. Sierra-Fox.
15 MS. SIERRA-FOX: Good afternoon, Your Honor. Rosa
16 Sierra-Fox on behalf of the U.S. Trustee.
17 Your Honor, I do have a question and I'm happy to
18 talk offline, but since the parties are gathered and there
19 seem to be a lot of parties-in-interest on the line and we
20 have the benefit of debtors' counsel's year.
21 Is this -- meanwhile, I believe there is a
22 disclosure statement approval hearing scheduled presently for
23 December 14th. And I think -- I guess, the -- in light of
24 this dispute, do the part -- does the debtor intend to go
25 forward with that or is there any update on that?
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1 THE COURT: Ms. Arthur?
2 MS. ARTHUR: If I may, Your Honor. I tried to
3 address it at the top of the -- at the outset of the -- of
4 this meeting, so apologies if it wasn't clear. But this
5 dispute does not impact the feasibility of the debtors'
6 proposal going forward and it will not impact the disclosure
7 statement or the hearing.
8 MS. SIERRA-FOX: Okay.
9 THE COURT: Okay. So it sounds like we've got an
10 agreed schedule for resolving the pending disputes. And if
11 other disputes arise, the parties know that the Court is
12 available to help resolve disputes once they've ripened.
13 Ms. Gibson.
14 (No verbal response)
15 THE COURT: I think you may be muted.
16 MS. GIBSON: Thank you. I apologize.
17 For the purpose of transparency, I just wanted to
18 let you know I represent a class of small (indiscernible)
19 that obtained PPP loans through KServicing, and we had filed
20 a class action against KServicing and Kabbage well before
21 they filed bankruptcy and were in discussions with its class
22 counsel at that time. And I've since discussed the case with
23 Ms. Arthur and her team.
24 But just to let you know, we have not been able to
25 reach a resolution on behalf of these class numbers whose PPP
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 22 of 23
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1 loans should have been forgiven under the SBA standards. And
2 for whatever reasons -- KServicing's portal not working -- I
3 don't want to get the (indiscernible) issues of the class
4 action.
5 But (indiscernible) given that tomorrow is the
6 deadline for claim (indiscernible) they're planning on filing
7 a Form 110 for provisional class claim, in addition to any
8 individuals filing individual proofs of claim, as well as a
9 class certification order under FRBP 702(3).
10 THE COURT: Okay. I take it there isn't a dispute
11 that currently requires the Court's attention. You're going
12 to file your papers and the debtors will or won't oppose it
13 and we'll have to deal with it when we have to deal with it.
14 Is that essentially where we are?
15 MS. GIBSON: That is essentially where we are. I
16 just wanted to put the Court on (indiscernible)
17 THE COURT: Okay. Appreciate that.
18 Is there any other party-in-interest that would
19 like to be heard while we are all here?
20 (No verbal response)
21 THE COURT: Okay. If not, I'm glad the schedules
22 that the parties have proposed for addressing the dispute are
23 consented to. I'm happy to address these matters when it's
24 fully briefed and before me. And obviously, we'll be seeing
25 folks, as Mr. Arthur described, at a disclosure statement
Case 22-10951-CTG Doc 336-3 Filed 12/07/22 Page 23 of 23
22
1 hearing in a couple of weeks. If anything arises that
2 requires our attention in the meantime, everyone knows how to
3 get in contact with us.
4 So, with that and thanks to counsel, we're
5 adjourned. Thank you.
6 (Proceedings concluded at 1:54 p.m.)
7 *****
8 CERTIFICATION
9 I certify that the foregoing is a correct
10 transcript from the electronic sound recording of the
11 proceedings in the above-entitled matter to the best of my
12 knowledge and ability.
13
14
15
16
17
18 November 29, 2022
19 Coleen Rand, AAERT Cert. No. 341
20 Certified Court Transcriptionist
21 For Reliable
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