In re Kabbage, Inc. d/b/a KServicing, et al. — Transcript of March 20, 2023 Hearing
- Date
- 2023-03-20
Summary
Doc 710, filed 03/21/23 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 the transcript of the Monday, March 20, 2023 hearing before Judge Craig T. Goldblatt. The main matter is the Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank, Docket No. 340, with interim fee applications also on the agenda. Debtors' counsel states that the dispute has narrowed to borrower remittances, with about 1.5 million at issue. The index lists two witnesses called by the debtors and one called by Customers Bank, and exhibits including the parties' Settlement and Release Agreement. The court states it will give a ruling at 1 o'clock on Wednesday, and the 197-page transcript ends with the transcriptionists' certificate.
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Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 1 of 197 1 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE 1 2 3 4 5 6 7 8 9 10 IN RE: . . KABBAGE, INC., d/b/a . KSERVICING, et al., . . . . Debtors. . . . . . . . . . . . . . . . . . . Chapter 11 Case No. 22-10951 (CTG) (Jointly Administered) Courtroom No. 7 824 Market Street Wilmington, Delaware 19801 Monday, March 20, 2023 10:00 a.m. TRANSCRIPT OF HEARING BEFORE THE HONORABLE CRAIG T. GOLDBLATT UNITED STATES BANKRUPTCY JUDGE 11 APPEARANCES: 12 For the Debtors: 14 Zachary I. Shapiro, Esquire RICHARDS, LAYTON & FINGER, PA One Rodney Square 920 North King Street Wilmington, Delaware 19801 15 -and- 16 Theodore E. Tsekerides, Esquire Richard W. Slack, Esquire WEIL, GOTSHAL & MANGES, LLP 767 Fifth Avenue New York, New York 10153 13 17 18 19 (APPEARANCES CONTINUED) 20 Audio Operator: Theresa Mistretta, ECRO 21 Transcription Company: Reliable The Nemours Building 1007 N. Orange Street, Suite 110 Wilmington, Delaware 19801 Telephone: (302)654-8080 Email: gmatthews@reliable-co.com 22 23 24 25 Proceedings recorded by electronic sound recording, transcript produced by transcription service. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 2 of 197 2 1 APPEARANCES (CONTINUED): 2 For Customers Bank: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Jeremy M. Sternberg, Esquire HOLLAND & KNIGHT, LLP 10 St. James Avenue 11th Floor Boston, Massachusetts 02116 Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 3 of 197 3 INDEX 1 2 MOTIONS: 3 Agenda Item 3: 4 5 6 7 8 9 10 Agenda Item 4: PAGE Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 340 – filed December 7, 2022] 12 Court's Ruling: 195 Interim Fee Applications 12 Court's Ruling: 12 11 12 13 WITNESSES CALLED BY THE DEBTORS: PAGE 14 TAMICA M. WILLIAMS 15 Direct examination by declaration -- 16 Cross-examination by Mr. Sternberg 18 17 Redirect examination by Mr. Tsekerides 63 18 19 DONNA R. EVANS 20 Direct examination by declaration -- 21 Cross-examination by Mr. Sternberg 72 22 Redirect examination by Mr. Tsekerides 86 23 Recross-examination Mr. Sternberg 89 24 25 Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 4 of 197 4 INDEX 1 2 3 WITNESSES CALLED BY CUSTOMERS BANK: PAGE 4 ALYSSA WHITE 5 Direct examination by Mr. Sternberg 99 6 Cross-examination by Mr. Slack 120 7 Redirect examination by Mr. Sternberg 169 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 5 of 197 5 EXHIBITS 1 2 DEBTORS’ EXHIBITS: 3 1 - Settlement and Release Agreement, dated October 27, 2022 (including all exhibits thereto) [Docket No. 232-1 - filed November 9, 2022] 14 2 - Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 340 - filed December 7, 2022] 14 3 - Declaration of Tamica M. Williams in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 341 - filed December 7, 2022] (FILED UNDER SEAL) 14 4 - Exhibit 1 to the Declaration of Tamica M. Williams in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 341-1 - filed December 7, 2022] (FILED UNDER SEAL) 14 5 - Exhibit 2 to the Declaration of Tamica M. Williams in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 341-2-filed December 7, 2022] (FILED UNDER SEAL) 14 6 - Exhibit 3 to the Declaration of Tamica M. Williams in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 341-3 - filed December 7, 2022] (FILED UNDER SEAL) 14 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PAGE Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 6 of 197 6 EXHIBITS 1 2 DEBTORS’ EXHIBITS: 3 7 - Exhibit 4 to the Declaration of Tamica M. Williams in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 341-4 - filed December 7, 2022] (FILED UNDER SEAL) 14 8 - Exhibit 5 to the Declaration of Tamica M. Williams in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 341-5 - filed December 7, 2022] (FILED UNDER SEAL) 14 9 - Declaration of Donna R. Evans in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 342 - filed December 7, 2022] (FILED UNDER SEAL) 14 10- Exhibit 1 to the Declaration of Donna R. Evans in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 342-1 - filed December 7, 2022] (FILED UNDER SEAL) 14 11- Exhibit 2 to the Declaration of Donna R. Evans in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 342-2 - filed December 7, 2022] (FILED UNDER SEAL) 14 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PAGE Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 7 of 197 7 EXHIBITS 1 2 DEBTORS’ EXHIBITS: 3 12- Exhibit 3 to the Declaration of Donna R. Evans in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 342-3 - filed December 7, 2022] (FILED UNDER SEAL) 14 13- Exhibit 4 to the Declaration of Donna R. Evans in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 342-4- filed December 7, 2022] (FILED UNDER SEAL) 14 14- Exhibit 5 to the Declaration of Donna R. Evans in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 342-5 - filed December 7, 2022] (FILED UNDER SEAL) 14 15- Exhibit 6 to the Declaration of Donna R. Evans in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 342-6- filed December 7, 2022] (FILED UNDER SEAL) 14 16- Exhibit 7 to the Declaration of Donna R. Evans in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 342-7 - filed December 7, 2022] (FILED UNDER SEAL) 14 17- Opposition of Customers Bank to Debtors' Motion for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 356 - filed December 21, 2022] 14 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PAGE Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 8 of 197 8 EXHIBITS 1 2 DEBTORS’ EXHIBITS: 3 18- Declaration of Alyssa White in Support of Opposition of Customers Bank to Debtors' Motion for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 358 -filed December 21, 2022] (FILED UNDER SEAL) 14 19- Exhibits 1-10 to the Declaration of Alyssa White in Support of Opposition of Customers Bank to Debtors' Motion for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 358-1- filed December 21, 2022] (FILED UNDER SEAL) 14 20- Debtors' Reply in Further Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 670 - filed March 13, 2023] 14 21- Declaration of Tamica M. Williams in Further Support of Debtors' Reply in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement A1rreement Between KServicing and Customers Bank [Docket No. 671 - filed March 13, 2023], including Exhibits A-D 14 22- Exhibit A to the Declaration of Tamica M. Williams in Further Support of Debtors' Reply in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 671-1 - filed March 13, 2023] 14 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PAGE Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 9 of 197 9 EXHIBITS 1 2 DEBTORS’ EXHIBITS: 3 23- Exhibit B to the Declaration of Tamica M. Williams in Further Support of Debtors' Reply in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 671-2-filed March 13, 2023] 14 24- Exhibit C to the Declaration of Tamica M. Williams in Further Support of Debtors' Reply in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 671-3 - filed March 13, 2023] 14 25- Exhibit D to the Declaration of Tamica M. Williams in Further Support of Debtors' Reply in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 671-4-filed March 13, 2023] 14 26- Declaration of Donna R. Evans in Further Support of Debtors' Reply in Support of Motion of Debtors for Entry of an Order Enforcing the Settlement Order and the Settlement Agreement Between KServicing and Customers Bank [Docket No. 672 - filed March 13, 2023] 14 27- Synovus account analysis l 1.4.22 (excel spreadsheet) 14 28- Customers Bank remittance file KService 10.03.22_1 l.4.22 (excel spreadsheet) 14 29- CUBI payment details 10212020 (excel spreadsheet) 14 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PAGE Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 10 of 197 10 EXHIBITS 1 2 CUSTOMERS BANK'S EXHIBITS: 3 1 - Reconciliation Summary provided by Customers Bank to KServicing representing Customers Bank’s calculation of the Settlement Payment at the end of the reconciliation period, or November 9, 2022 99 3 - Email from Donna Evans, dated November 4, 2022 re KServicing Update # 3, includes Synovus bank statements 74 14- Email from Donna Evans dated November 9, 2022 attaching Trial Balance 81 4 5 6 7 8 9 PAGE 10 11 DECLARATIONS: 12 1) Declarations of Tamica M. Williams 13 13 2) Declarations of Donna R. Evans 71 14 3) Declaration of Alyssa White 98 15 Transcriptionists' Certificate 197 16 17 18 19 20 21 22 23 24 25 PAGE Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 11 of 197 11 1 (Proceedings commence at 10:00 a.m.) 2 THE COURT: 3 (Participants confer) 4 THE COURT: 5 Mr. Shapiro. 7 MR. SHAPIRO: 9 10 So good morning. Good morning. I will just walk Your Honor through the agenda very quickly and then turn it over to Mr. Tsekerides. THE COURT: 12 MR. SHAPIRO: Okay. Item Number 2 was listed as an 13 uncontested matter. 14 we should -- it should be resolved. 15 forward today. 17 18 19 We are still working to resolve that and It's not going to go In the unlikely event that we have -- we need Your Honor's guidance, we know how to reach out. THE COURT: Got it. Okay. That makes good sense. This is as to the 2004 exam. 20 MR. SHAPIRO: 21 THE COURT: 22 For the record, Zach Shapiro, Richards, Layton & Finger, on behalf of the debtors. 11 16 We are here in In Re Kabbage, Inc., which is Case Number 22-10951. 6 8 Be seated. Correct. And you're going to endeavor to submit an agreed order; and, if not, you'll let me know. 23 MR. SHAPIRO: Yes. 24 THE COURT: Perfect. 25 MR. SHAPIRO: And then, skipping ahead, Item Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 12 of 197 12 1 Number 4 were interim fee applications for which we submitted 2 an order under COC. 3 THE COURT: Right. 4 MR. SHAPIRO: 5 Honor is still looking at this -- 6 THE COURT: 7 MR. SHAPIRO: 8 THE COURT: 9 MR. SHAPIRO: 10 THE COURT: I enter the -- I understand Your Right. -- and will -We'll do our --- let us know --- best to get those done as promptly 11 as we can. 12 reach out, but -- to set a hearing. 13 through them and nothing jumps out at us, we'll get those 14 orders entered as quickly as we can. 15 MR. SHAPIRO: 16 So, with that, I will turn the podium over. 17 THE COURT: 18 MR. TSEKERIDES: 19 20 In the event we were to run into an issue, we'd But assuming we get Thank you. Okay. Mr. Tsekerides. Yes. Good morning, Your Honor. Ted Tsekerides from Weil Gotshal for the debtors. So I'd like to lay out what the plan is for today 21 and see if it's agreeable. This is on the motion we filed, I 22 think back in December, on the settlement agreement dispute, 23 on how much money we thought was owed. 24 issue down to just one issue on what we call "borrower 25 remittances," and the amount at issue is about 1.5 million. We've narrowed the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 13 of 197 13 1 The way we'd like to proceed, we have two 2 witnesses; the other side has one witness. 3 in the two declarations of our first witness. 4 that counsel for the adversary cross her, then put the other 5 one in and do it that way, then they can put theirs in, if 6 that's okay with the Court. 7 THE COURT: 8 MR. STERNBERG: 9 10 11 That is agreeable, Your Honor. Jeremy Sternberg on behalf of Customers Bank. THE COURT: Okay. Then, certainly, we can -- if the parties agree, I'm not going to get in the way -MR. TSEKERIDES: 13 THE COURT: 14 MR. TSEKERIDES: 15 THE COURT: 16 MR. TSEKERIDES: 18 I'd propose Is that agreeable on your side? 12 17 I'd like to move Okay. -- so you can certainly proceed -So let me -- -- that way. Let me dispense with some of those formalities. So I'd like to move first in the two declarations 19 from the company's corporate controller, Tamica Williams. 20 That's at Docket 341 and 671, with the company exhibits. 21 THE COURT: 22 MR. STERNBERG: 23 THE COURT: 24 25 Any objection? No objection. Okay. They will be admitted. (Williams Declarations received in evidence) MR. TSEKERIDES: Okay. And then I hope Your Honor Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 14 of 197 14 1 has a binder or some materials that we submitted with 2 exhibits. 3 THE COURT: 4 MR. TSEKERIDES: 5 THE COURT: 6 MR. TSEKERIDES: 7 THE COURT: 8 MR. TSEKERIDES: 9 12 -- of those materials -So, for -- -- yes. THE COURT: For now, I'd like to move in Hold on. Exhibits 1 through 29. Any objection? (Participants confer) 13 MR. STERNBERG: 14 THE COURT: 15 Okay. Exhibits 1 through 29 of the debtors' exhibits. 10 11 I've got the electronic versions -- No objection to those. Okay. They will be admitted. (Debtors' Exhibits 1 through 29 received in evidence) 16 MR. TSEKERIDES: There were a few more, I think 30 17 through 36. Those address some disputes we had about some 18 discovery points that relate to this. 19 that up, depending on what happens with their witness. 20 in order to avoid any skirmishes at the beginning here, let's 21 just table that for later. 22 THE COURT: 23 MR. TSEKERIDES: Mr. Slack might take But That's agreeable here. Okay. So, with that, with our 24 declarations in -- and I do want to make one point I forgot. 25 On the Williams declaration -- and this will also Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 15 of 197 15 1 apply to the other one, too -- obviously, the parties have 2 talked since those -- the first one was filed. 3 be some paragraphs that aren't directly relevant any longer. 4 Rather than going through and try to piece out individual 5 paragraphs, since it's not a jury trial, I think you -- 6 unless the Court wants us to, we'll just leave -- 7 THE COURT: 8 MR. TSEKERIDES: 9 THE COURT: 10 MR. TSEKERIDES: 11 THE COURT: There might No. -- them the -- There's other --- way they are. -- things that are admitted that have 12 become rendered obsolete -- 13 MR. TSEKERIDES: 14 THE COURT: Exactly. -- by virtue of the issues narrowing. 15 Having them admitted, unless there's -- someone has an issue 16 with it, I don't think it -- see there being any harm in 17 there being extraneous material in the record. 18 19 MR. TSEKERIDES: I just wanted to reference that for the Court. 20 THE COURT: Okay. No, I appreciate that. 21 And just before we go on, just to make sure that 22 we're all rowing together, Mr. Sternberg, you agree with what 23 Mr. Tsekerides said about the issues narrowing and that we've 24 got this dispute about the $1.5 million in the -- what is 25 referred to as the "disputed remittances." Is -- are we on Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 16 of 197 16 1 the same page there? 2 MR. STERNBERG: 3 THE COURT: 4 correctly on what the parties -- Okay. 5 MR. TSEKERIDES: 6 THE COURT: 7 MR. TSEKERIDES: 8 THE COURT: 9 MR. TSEKERIDES: 10 something happened. We are. Just so that I'm focused Yeah. -- actually -- where they agree and -That's actually -- -- disagree. -- good to know, in case Yeah. 11 THE COURT: Okay. 12 MR. TSEKERIDES: 13 THE COURT: 14 MR. TSEKERIDES: Okay. Very well. So -I appreciate that. So, with that, it's in. 15 Ms. Williams is here in the courtroom, available to be 16 crossed. 17 THE COURT: 18 examine Ms. Williams? Okay. And do you wish to cross- 19 MR. STERNBERG: I do, Your Honor. 20 And before we start that cross-examination, I'd 21 like to ask the Court to invoke the role on sequestration of 22 witnesses and to have Ms. Evans outside the courtroom -- 23 THE COURT: 24 MR. STERNBERG: 25 Okay. -- and, in turn, also the Customers Bank witness who's here, Ms. White, in fairness, Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 17 of 197 17 1 should also be outside the courtroom. 2 THE COURT: 3 MR. TSEKERIDES: 4 Okay. THE COURT: 6 MR. TSEKERIDES: 7 THE COURT: 8 MR. TSEKERIDES: 9 THE COURT: Yeah, as long as Ms. White is Okay. That's fine. So both of the -Yeah. Both fact witnesses who are not yet testifying should leave the courtroom. 11 (Participants confer) 12 THE COURT: 13 Certainly. (Laughter) 15 (Participants confer) 16 MR. STERNBERG: Your Honor, if I might, I'll put a binder on Ms. Williams' desk. 18 THE COURT: 19 (Participants confer) 20 21 Certainly. MR. STERNBERG: I'd like to call Ms. Williams for cross-examination. 22 23 If you can resolve this while you're there, that would be great. 14 17 So, if -- also not here. 5 10 Very well. THE COURT: Okay. Ms. Williams, if you can take the stand. 24 And Ms. Barksdale, if you could swear the witness. 25 THE COURT OFFICER: Raise your right hand. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 18 of 197 18 1 TAMICA WILLIAMS, WITNESS FOR THE DEBTORS, AFFIRMED 2 THE COURT OFFICER: Please state your full name 3 and spell your last name for the record. 4 THE WITNESS: 5 THE COURT OFFICER: Thank you. 6 THE COURT: You can proceed. 7 MR. STERNBERG: 8 Tamica Williams, W-I-l-l-I-a-m-s. Okay. You may be seated. Thank you, Your Honor. CROSS-EXAMINATION 9 BY MR. STERNBERG: 10 Q 11 declaration has now gone in. 12 Ms. Williams, I won't belabor the background since your You joined Kabbage in November 2021. Is that correct? 13 A That is correct. 14 Q And that's about a year and four months after the 15 Kabbage/Customers Bank relationship had been established? 16 A That is correct. 17 Q Okay. 18 and Customers Bank reached a settlement agreement in this 19 case that the Court entered on November 9th, 2022? 20 A Yes. 21 Q In that settlement agreement, do you understand that 22 there was a process called for called "reconciliation"? 23 A Yes. 24 Q The reconciliation was limited by time, correct? 25 A Not that I'm aware of. Now, Ms. Williams, you understand that Kabbage Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 19 of 197 19 1 MR. STERNBERG: Okay. Your Honor, may I -- 2 Q Well, Ms. Williams, you have two binders on your desk. 3 A Yes. 4 Q Once is a Customers Bank exhibit binder and then one is 5 a binder from your counsel. 6 If you could turn to the binder from your counsel, it's 7 the thicker of the two binders, it's called "Debtors' Hearing 8 Exhibit Binder." 9 Take a look at the first tab, it's called "Settlement 10 Agreement and Release." 11 A The first tab. 12 Q Do you see a document called "Settlement Agreement"? 13 A Yes, I do. 14 Q If you could turn to Paragraph 3, it's on Page 5 of 15 that agreement. 16 A Okay. 17 Q Do you see there's a paragraph that's entitled 18 "Reconciliation"? 19 A Yes, I do see that. 20 Q And that paragraph reads as follows: 21 "Following the execution of this agreement through 22 the effective date, the parties shall work together in good 23 faith to promptly reconcile the amount of the disputed case 24 servicing fee holdback." 25 Did I read that correctly? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 20 of 197 20 1 A Yes. 2 Q And do you see, right above Paragraph 3, there's a 3 Paragraph 2 that's called "Effective Date"? 4 A Yes. 5 Q Yes. 6 as: And do you see that "effective date" is defined 7 "The agreement shall be effective on the date on 8 which the Bankruptcy Court approves this agreement, pursuant 9 to Paragraph 5." 10 A I do see that. 11 Q Do you understand that the Court, the Bankruptcy Court, 12 approved the settlement agreement on November 9th, 2022? 13 A Yes, I see that. 14 Q So do you understand that the reconciliation period ran 15 from roughly October 27th, 2022 -- which is the date the 16 parties signed it -- to November 9th, 2022? 17 MR. TSEKERIDES: Your Honor, I object to the 18 extent that it calls for a legal conclusion. 19 understanding on her own, I think that's fair, but if he's 20 asking her to interpret the document, I think that's 21 objectionable. 22 23 THE COURT: To the extent you have knowledge of the question, you can answer. 24 25 If she has an THE WITNESS: please? Can you ask me that question again, Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 21 of 197 21 1 MR. STERNBERG: Sure. 2 BY MR. STERNBERG: 3 Q 4 the terms of the agreement, ran from October 27th, 2022 to 5 November 9th, 2022? 6 A I -- I can't say that I understand that. 7 Q Did you understand something different about the 8 reconciliation period? 9 A 10 some type of resolution was reached. 11 Q 12 we're both looking at to Page 9, there's a paragraph called 13 "Entire Agreement," Paragraph 12. 14 A 15 Do you understand that the reconciliation period, by I understood that we were continuing to reconcile until If you'd turn further in the settlement agreement that I see that. (Participants confer) 16 Q 17 written agreement to amend the reconciliation period? 18 A I am not aware of that. 19 Q Now the reconciliation period -- or strike that. 20 Are you aware of whether the parties entered into any During the reconciliation, Kabbage provided certain 21 information to Customers Bank, correct? 22 A That is correct. 23 Q Some of that information was uniquely within Kabbage's 24 control, correct? 25 A "Uniquely" in Kabbage's control? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 22 of 197 22 1 Q Sure. As servicer, Kabbage collected funds from 2 borrowers on Customers Bank's behalf, correct? 3 A Correct. 4 Q As servicer, Kabbage had those funds deposited into a 5 bank account that Kabbage controlled, correct? 6 A That is correct. 7 Q As servicer, Kabbage was responsible for reporting to 8 Customers Bank, on a loan-level basis, all the payments that 9 had been received. 10 A That is correct. 11 Q As servicer, Kabbage was responsible for turning over 12 the borrower payments to Customers Bank. 13 A That would be correct. 14 Q As servicer, Kabbage maintained a bank account to hold 15 those borrower remittances on behalf of Customers Bank, 16 correct? 17 A Yes. 18 Q And the information about that bank account was 19 uniquely within Kabbage's control. 20 A Kabbage did have control of the bank account. 21 Q In other words, Customers Bank, prior to October 3rd, 22 2022, could not log into some portal or call the bank and get 23 bank account information, could it? 24 A Not that I'm aware of. 25 Q At some point, Kabbage started withholding borrower Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 23 of 197 23 1 payments from Customers Bank? 2 A I understand that to be true. 3 Q And as a result of Kabbage's withholding of these 4 borrower -- what we call "borrower remittances" or borrower 5 payments, was one of the reconciliation items called for by 6 the settlement agreement to reconcile the amount of the 7 borrower payments that had been withheld from Customers Bank? 8 A Can you repeat that question? 9 Q Sure. 10 Did you understand that one of the items to be 11 reconciled as part of the settlement agreement was the amount 12 of borrower payments that Kabbage had withheld from Customers 13 Bank? 14 A Yes, that was to be reconciled. 15 Q And those borrower payments were made to an account at 16 a bank called Synovus? 17 A 18 certain point in time, yes. 19 Q 20 been made to a Synovus bank account. 21 A 22 account originated post the relationship between Customers 23 Bank and KServicing. 24 Q 25 Kabbage provide information to Customers Bank to reconcile At a certain point in time, yes. There was -- at a The payments to be reconciled were payments that had Not necessarily. There were -- the Synovus bank So, in the course of the reconciliation process, did Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 24 of 197 24 1 borrower payments for any bank account other than the Synovus 2 account? 3 A Can you repeat that question? 4 Q As part of the reconciliation, did Kabbage provide 5 information to Customers Bank about borrower remittances to 6 any account other than the Synovus account? 7 A As part of the reconciliation process, yes. 8 Q So Kabbage provided bank statements, for example, for 9 bank accounts other than the Synovus account? 10 A 11 part of the declarations that I believe Customers Bank has 12 access to that was not a Synovus account. 13 Q 14 Customers Bank? 15 A 16 understanding is that payments were being withheld when I 17 started with KServicing in November of 2021. 18 Q 19 correct? 20 A I believe it was, yes. 21 Q Were bank -- were payments being withheld from 22 Customers Bank before November 2020? 23 A Not that I'm aware of. 24 Q You weren't there at the time. 25 A No, I was not. I'm sorry. We did provide a bank statement that I'm aware of as When did Kabbage start withholding payments from I'm not exactly certain of that. That -- my The Synovus bank account was formed in November 2020, I -- I can't speak to that. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 25 of 197 25 1 Q Was the account that Kabbage established at Synovus 2 Bank called the CUBI -- C-U-B-I -- PPP account? 3 A 4 we -- KServicing has referred to that account as the "CUBI 5 account." 6 Q 7 on your desk called "Exhibits of Customers Bank." 8 thinner of the two binders. Was it called that? It was referred to that by -- Take a look, if you would, Ms. Williams, at the binder 9 MR. STERNBERG: 10 the Court, if that would be helpful. Your Honor, I have a binder for 11 THE COURT: 12 it -- actually, you know what? 13 you. 14 It's the I'm -- I think I'm happy to look at That would be helpful. Thank (Participants confer) 15 BY MR. STERNBERG: 16 Q Ms. Williams, if you would -- 17 THE COURT: Thank you. 18 Q -- turn to Tab 3 of that binder you'll see a cover 19 email. 20 bank account statement from November 2020. 21 A Yes. 22 Q And do you see that the beginning balance on the 23 account was zero, and then there were a series of deposits 24 made starting in mid-November of 2020? 25 A And then, if you turn the page, you'll see a Synovus Yes, I see that. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 26 of 197 26 1 Q 2 Inc. PPP Payments CUBI"? 3 A Yes, I see that. 4 Q Do you understand that "CUBI" is a shorthand for 5 Customers Bank? 6 A Yes, I do. 7 Q Now, up until Kabbage filed for bankruptcy, is it fair 8 to say that Customers Bank had no visibility into this bank 9 account, correct? 10 A I'm not certain of that. 11 Q Did Customers Bank have any control over this account 12 at any time? 13 A Not that I'm aware of. 14 Q And is it fair to say that Customers Bank relied on 15 Kabbage to provide whatever information Kabbage was willing 16 to provide about this Synovus bank account? 17 And do you see that the account is called "Kabbage, MR. TSEKERIDES: Object to the form, Your Honor. 18 How is she going to know what Customers Bank was relying on? 19 It's an inappropriate question. 20 THE COURT: 21 MR. STERNBERG: Is there a response? I'm going to rephrase, Your Honor. 22 BY MR. STERNBERG: 23 Q 24 October 3rd, 2022 that Customers Bank received about the 25 Synovus account it received from Customers Bank? Is it your understanding that any information prior to Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 27 of 197 27 1 A I'm sorry. 2 Q Yes. 3 Can you repeat that for me? Is it your understanding that, prior to October 3rd, 4 2022, any information that Customers Bank received about this 5 Synovus bank account, it received from Kabbage? 6 A 7 have received for this -- from this bank account. 8 Q 9 we already talked about, started in April 2020. 10 A 11 relationship. 12 KServicing. 13 Q 14 established, had Kabbage already been servicing thousands of 15 loans for Customers Bank? 16 A 17 were being serviced in 2020. 18 Q 19 for Customers Bank prior to November 2020? 20 A 21 they were. 22 Q 23 process to account for all of the borrower remittances that 24 had been received into this Synovus account that we're 25 looking at in Tab 3? I'm not -- I can't speak to everything that they may You know that the parties' contractual relationship, as I'm not aware of the start date of the contractual I know that it was prior to my employment with At the time that this Synovus bank account was I -- I can't speak to what -- the number of loans that Were there servicing -- was Kabbage servicing any loans Prior to November 2020. It is my understanding that What steps did you take as part of the reconciliation Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 28 of 197 28 1 A Can you repeat that question? I'm sorry. 2 Q What did you do to reconcile all of the borrower 3 remittances that had been received into this Synovus bank 4 account. 5 Tab 3. 6 A 7 file from our prior CFO, and I established a process to 8 reconcile the current listing of the remittance file to the 9 liability due to -- to CUBI. 10 Q 11 that? 12 A 13 that I received the file from the prior CFO, which would have 14 been late April 2022. 15 Q 16 borrower remittances into the Synovus bank account as part of 17 the settlement agreement reconciliation process, did you 18 consult with anyone from AlixPartners? 19 A No, I did not. 20 Q Did you do all that work within the four walls, to 21 speak, of Kabbage? 22 A Within the four walls of Kabbage. 23 Q Okay. 24 that, at its core, the job of a loan servicers is to collect 25 money from borrowers and apply it to their loans? When I say "this," the one that's depicted in Well, I inherited the borrower remittances tracking Which bank accounts did you look at in order to do I used the Synovus bank account activity from the date As part of your effort to reconcile the amount of Yes. Yes, I did. Ms. Williams, would you agree to me -- with me Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 29 of 197 29 1 A I would agree that that is a part of servicing. 2 Q Would you agree with me that another core part of 3 servicing is that, in addition to collecting the money and 4 applying it to the loans, is to account for those payments 5 and those applications to the bank? 6 A 7 hear the word before "bank." 8 Q 9 not only to collect the money and apply it to the borrower's 10 loans, but to account for those payments and collections to 11 the bank? 12 A 13 referring to? 14 Q 15 Is to -- can you repeat that last part? I -- I didn't I'm sorry. Is one of the important functions of a loan servicer, When you say, "to the bank," which bank are you Let's talk about Customers Bank. So, if Customers Bank loaned $100 to a PPP borrower and 16 Kabbage was the servicers, and Kabbage received $10 in the 17 month of November 2020, was it Kabbage's job to collect that 18 money into the Synovus account, apply it to the borrower 19 balance, and tell Customers Bank that it had done so? 20 A Yes. 21 Q And if, after November 2020, a borrower had sent money 22 in payment of a loan, a PPP loan, a Customers Bank borrower, 23 that money would have been received into the Synovus bank 24 account? 25 A After the establishment of the Synovus bank account, Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 30 of 197 30 1 yes. 2 Q 3 bank account after November 2020, fair to say that Kabbage 4 would make an entry into its account to reduce that balance 5 of that loan by whatever the amount of the payment was? 6 A That is correct. 7 Q And did Kabbage create a running document that showed 8 every payment that was made and every application to the 9 borrower's balance? 10 A 11 limited to after November 2020. 12 Q 13 that before 2020, after 2020. 14 servicer, right? 15 A Correct. 16 Q I'm just focusing now on the period after 2020. And when Kabbage received that money into the Synovus That running document was created, but it was not Fair point. I mean, it's the job of a servicer to do That's a core job of a 17 Is it fair to say, after November 2020, any money that 18 came into Synovus account, Kabbage made an effort to account 19 for it and report that accounting to Customers Bank? 20 A If it were a Customers Bank customer payment, yes. 21 Q What's a trial balance? 22 A My understanding of a trial balance as a finance 23 professional is a balance of general ledger accounts at a 24 period of time. 25 Q At a very high level, do you understand that a trial Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 31 of 197 31 1 balance shows at least the following information: 2 of money that the bank has laid out to borrowers and the 3 amount of the balance remaining to be collected? 4 A 5 my understanding of a trial balance as a finance professional 6 consists of general ledger account balances at a period in 7 time. 8 Q 9 do with PPP loan programs? 10 A 11 individual PPP loan balances. 12 Q 13 understanding of a trial balance include that, at the 14 aggregate level, if Customers Bank has loaned out 15 $100 million in total to thousands of borrowers, and those 16 thousands of borrowers have paid back $20,000, do those two 17 data points constitute part of a trial balance in your 18 lexicon? 19 A No, they do not. 20 Q Okay. 21 "trial balance." 22 The amount That's not my understanding of a trial balance. My -- So your understanding of a trial balance has nothing to My understanding of a trial balance would not entail How about at the aggregate level, does your Whatever we call it -- let's not call it a Let's just refer to what the data is. As of the date of the bankruptcy petition, October 3rd, 23 2022, did Kabbage have an accurate accounting of how much 24 money had been loaned and how much money it had collected on 25 those loans? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 32 of 197 32 1 A 2 account of amounts that had been loaned and the amount of 3 money collected on those loans. 4 Q 5 On October 3rd. On October 3rd, Kabbage did have an My question had another modifier in it. Did it have an accurate account of those two figures? 6 A Accurate, to the best of our knowledge, yes. 7 Q Is it your understanding that the data that Kabbage had 8 on October 3rd, 2022 was actually accurate? 9 A Is it my understanding it was actually accurate? 10 Q You said it was accurate to the best of your ability or 11 understanding. 12 actually accurate -- 13 A Well, it -- 14 Q -- based on -- 15 A -- would be -- 16 Q -- the real -- 17 A It would -- 18 Q -- numbers? 19 A -- be accurate to the best of information that we would 20 have had at the time. 21 Q 22 control? 23 A 24 from the SBA. 25 Q Is that different from whether it was Well, isn't the information entirely within Kabbage's Not necessarily. There's information that we receive Is there any information that Kabbage needed, but Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 33 of 197 33 1 didn't have, as of October 3rd, 2022, in order to accurately 2 portray the amount of loans made and the amount of loan -- 3 borrower payments on those loans? 4 A 5 may have been outstanding with the SBA at that time. 6 Q 7 Kabbage provide Customers Bank with information about what 8 Kabbage thought the settlement payment should be? 9 A If it -- repeat that for me one more time, please. 10 Q During the reconciliation process, did anyone from 11 Kabbage provide Customers Bank with any data or information 12 about what Kabbage thought the settlement payment should be? 13 A 14 not sure if anyone else provided. 15 Customers Bank. 16 Q 17 and information and bank account statements and other 18 information in order to allow Customers Bank to calculate the 19 settlement payment? 20 A 21 Customers Bank. 22 purposes of them calculating a settlement payment. 23 Q 24 reconciliation called for by the settlement agreement? 25 A I am not aware of the exact status of information that During the reconciliation process, did anyone from During the time of the reconciliation, I did not. I'm I -- I did not provide To your knowledge, did Kabbage supply a series of data I understand that there was information provided to I do not know whether or not it was for the Do you know whether it was for the purposes of the No, I do not know if it was that purpose. I was not Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 34 of 197 34 1 involved in the process when -- when those -- when that 2 information was provided. 3 Q 4 Bank had made the settlement payment? 5 A 6 payment? 7 A On or about November 14th, 2022. 8 Q I did become involved before November 14th. 9 Q What date did you become involved? 10 A November 7th. 11 Q Take a look, if you would, Ms. Williams, at Tab 3 in 12 the smaller of your two binders. 13 A Tab 3. 14 Q Do you see an email dated November 4th, 2022, at 15 7:48 p.m. from Donna Evans to a group of -- excuse me -- a 16 group of people? 17 A I do see that email. 18 Q Have you seen this email before? 19 A I have seen this email printed as part of the exhibits 20 before, yes. 21 Q 22 group of people, including Alyssa White, talks about a 23 Synovus account analysis? 24 A I do see that, yes. 25 Q And Ms. Evans says that KServicing -- "KServicing" is Did you get involved in the process after Customers On what date did Customers Bank make the settlement And do you see that the email from Ms. Evans to the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 35 of 197 35 1 another word for Kabbage? 2 A Generally, yes. 3 Q Do you understand, if I use "Kabbage" and "KServicing," 4 I'm referring to your employer? 5 A Yes, I -- I do. 6 Q It says: 7 "KServicing has performed an analysis of the 8 activity in the Synovus account from inception to 9 October 3rd, 2022." 10 Do you see that? 11 A I do see that. 12 Q And is that your understanding of what Kabbage was 13 doing during the reconciliation process to provide 14 information about the Synovus account to Customers Bank? 15 A Can you repeat that question? 16 Q Sure. 17 Did you understand that, during the reconciliation 18 process, Kabbage was performing an analysis of the Synovus 19 bank account? 20 A 21 not involved at this time. 22 Q 23 I -- I was not aware of that at this time. I -- I was Do you see that Ms. Evans further says that: "The analysis was reconciling that activity in 24 that account to our remittances files." 25 A I do see where that is stated here. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 36 of 197 36 1 Q And "that account," as you read this, refers to the 2 Synovus account? 3 A Yes. 4 Q What are "remittances files"? 5 A The remittance file is a listing of customer payments 6 made by Customers Bank customers, along with customer refunds 7 made to Customers Bank customers and any payments to the SBA 8 on behalf of Customers Bank. 9 Q 10 informing Customers Bank on a monthly basis how much money 11 had been collected and borrowed? 12 A Yes. 13 Q If you turn to Tab 4, of the smaller binder, you will 14 see something called “KServicing Synovus borrower repayment 15 account analysis.” 16 A Yes. 17 Q Have you seen that document before? 18 A Yes, I have. So, basically, a way of informing with Kabbage 19 MR. TSEKERIDES: Your Honor, we did have one 20 objection to that document that we raised earlier that it 21 wasn’t complete, that there is a missing page at the end. 22 23 24 25 THE COURT: Okay. So, you’re talking about Exhibit 4? MR. TSEKERIDES: This is Customers Bank Exhibit 4, which appears, I think, in our Exhibit 22. We had raised Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 37 of 197 37 1 that with counsel earlier. 2 THE COURT: All right. So, let me make sure I 3 understand. 4 got a version of the same document that is your Exhibit 22. 5 6 So, its Customers Bank Exhibit 4 and you have MR. TSEKERIDES: Right, that has the complete document. 7 THE COURT: And you’ve got –- there’s an 8 additional page in your version that is absent in your 9 version? 10 MR. TSEKERIDES: Correct. 11 MR. STERNBERG: I’m happy to use the entire –- 12 MR. TSEKERIDES: That was the suggestion that we MR. STERNBERG: -- version. 13 had. 14 I am only focused on 15 this one page, but if counsel wants it to be a complete 16 exhibit that’s fine with us. 17 THE COURT: All right. So, I take it, Mr. 18 Tsekerides, for the purposes of this examination you’re fine 19 using their version because they are going to use a page that 20 is in both versions. 21 MR. TSEKERIDES: 22 THE COURT: 23 BY MR. STERNBERG: 24 Q 25 under Tab 4? Okay. Exactly. You can proceed. Ms. Williams, did you have any role in preparing what’s Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 38 of 197 38 1 A I did not. 2 Q Do you see that its entitled a Synovus borrower 3 repayment account analysis? 4 A I do see that. 5 Q Have you ever seen something called a Wells Fargo 6 borrower repayment account analysis? 7 A I have not. 8 Q Ms. Williams, you submitted two declarations in this 9 case? 10 A Yes. 11 Q Do you have them both in front of you? 12 A They should be in the notebook here. 13 MR. STERNBERG: 14 THE COURT: If I may approach, Your Honor. You may. 15 BY MR. STERNBERG: 16 Q 17 Ms. Williams, your two declarations. 18 that large binder, but this may be –- 19 A All right. 20 Q The one at the bottom right corner is dated 21 December 7th, 2022. 22 A I do. 23 Q And the other one in the bottom right corner is dated 24 March 13th, 2023. 25 A I am going to show you or I’m going to hand you up, Yes. I think they are in Do you see that? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 39 of 197 39 1 Q I will try to refer to them by date, but I also may 2 call them first and second declaration if that works for you. 3 THE COURT: So, my apologies. So that I have the 4 right documents in front of me, do you happen to have those 5 by docket item number? 6 7 MR. STERNBERG: Docket No. 341. Yes, Your Honor. The first one is The second is Docket –- 8 MR. TSEKERIDES: 671, the second one. 9 MR. STERNBERG: Thank you. 10 THE COURT: 11 Okay. So, I’ve got both of those in front of me. 12 MR. STERNBERG: 13 THE COURT: Would you like hard copies? No, I don’t need a hard copy. I’m 14 good. Thank you. 15 BY MR. STERNBERG: 16 Q 17 dated December 7th, 2022. 18 these with care and signed them after reading them 19 thoroughly. 20 A That is correct. 21 Q You were satisfied that they were entirely accurate and 22 truthful when you signed them? 23 A Yes. 24 Q And you personally read each word and looked at each 25 exhibit? Ms. Williams, let’s start with the first one, the one I take it you prepared both of Is that correct? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 40 of 197 40 1 A I did. 2 Q The first one, dated December 7th, 2022, says that you 3 supervised all accounting and financial functions of Kabbage. 4 That is Paragraph 1, do you see that? 5 A Yes. 6 Q You did that –- obviously, you couldn’t do that before 7 you started at Kabbage. 8 2021 forward. 9 A Correct. 10 Q When you started did you go back and do a 11 reconciliation of analysis of all the things that had 12 happened before you got there? 13 A No, I did not. 14 Q You started and then looked forward. 15 A I did, unless there was reason to go back and look at 16 the period before I got there. 17 Q 18 current dispute, the one we’re here today discussing arises 19 from Customers Bank’s failure to pay KServicing the full 20 amount owed under the settlement agreement. 21 think, as we talked about earlier, during the reconciliation 22 process you are not aware that anyone from Kabbage told 23 Customers Bank what Kabbage thought was owed as a settlement 24 payment, correct? 25 A You did that starting in November Paragraph 5 of your first declaration says that the Prior to the –- I’m sorry, can you –- Fair to say, I Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 41 of 197 41 1 Q During the reconciliation process no one from Kabbage 2 told Customers Bank here is what we think the settlement 3 payment should be. 4 A 5 the reconciliation process. 6 Q 7 November 9th did anyone from Kabbage tell anyone at Customers 8 Bank here is what we think, we at Kabbage think the 9 settlement payment should be. 10 A 11 November 9th. 12 Q 13 December 7th, 2022 affidavit, that it was your expectation, 14 Kabbage’s expectation, that the settlement payment would be 15 $23.2 million. 16 A Let me see. 17 Q And you used the word “approximately” to modify 18 $23.2 million, correct? 19 A Yes. 20 Q And you understood that the goal of the reconciliation 21 process that was embedded in the settlement agreement was to 22 find out what the actual number was. 23 A 24 settlement agreement. 25 Q During the reconciliation process, at some point during Let me ask it a different way. Before midnight on I can’t speak to that. I don’t know of anyone before You say in Paragraph 7 of the same affidavit, your Do you see that? I see that. The goal of the reconciliation process embedded in the We looked at the settlement agreement earlier today. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 42 of 197 42 1 And do you recall that we looked at Paragraph 3 that was 2 called reconciliation? 3 A Yes. 4 Q And one of the goals of that reconciliation paragraph 5 was to figure out the exact amount of the disputed KServicing 6 holdbacks, correct? 7 A That is correct. 8 Q So, the goal of the reconciliation process was to find 9 out exactly how much money was Kabbage holding in borrower 10 payments that it had not remitted to Customers Bank. 11 A That was the goal, yes. 12 Q And what the settlement agreement recited were 13 estimates that parties thought it was approximately this or 14 that, but the reconciliation process was going to define it 15 to the penny, correct? 16 A The reconciliation process, yes. 17 Q And as to the main aspect of this reconciliation, 18 figuring out the amount of borrower repayments that Kabbage 19 collected but not remitted over to Customers Bank that was 20 information that was uniquely within Kabbage’s possession. 21 A Can you repeat that for me? 22 Q Sure. 23 made to the Synovus Bank account, held by Kabbage, and not 24 paid over to Customers Bank that was information that was 25 uniquely within Kabbage’s possession. The amount of borrower payments that had been Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 43 of 197 43 1 A That is not true. 2 Q So, Customers Bank, prior to October 3rd, 2022, had 3 access to the Synovus Bank accounts? 4 A 5 October that showed what might be due. 6 they had remittance files each month prior to October 3rd. 7 Q 8 Kabbage had collected but not paid over to Customers Bank, 9 correct? 10 A They were. 11 Q The real proof of every dollar that was paid was in the 12 bank account, correct? 13 A 14 to November 2020 and the Synovus Bank account didn’t exist 15 until November 2020. 16 Q Ms. Williams, from November 2020 on –- 17 A Yes. 18 Q -- Kabbage collected borrower payments on behalf of 19 Customers Bank in the Synovus Bank account, correct? 20 A 21 2020. 22 Q 23 Kabbage’s possession prior to October 3rd, 2022. 24 A 25 to the bank account prior to that date. No, but they had remittance files each month prior to And there had been –- The remittance files were summary files of amounts that The remittance files were summary files. Not necessarily. The CUBIs loans were serviced prior It is my understanding that they did from November And that bank account information was uniquely within I am not aware of any access that CUBI would have had Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 44 of 197 44 1 Q You seem to be fighting me on the concept of whether 2 the bank account information was in Kabbage’s possession. Is 3 there a reason for that? 4 MR. TSEKERIDES: Your Honor, he doesn’t have to 5 characterize whether the witness is fighting him or not. It’s 6 not necessary. 7 THE COURT: 8 is your question to the witness? 9 10 Can you –- I guess my question is what MR. STERNBERG: I will withdraw the question, Your Honor. 11 THE COURT: Okay. 12 BY MR. STERNBERG: 13 Q 14 declaration, Ms. Williams –- 15 A Okay. 16 Q -- you say that KServicing has determined that the full 17 amount owed by Customers Bank to KServicing under the 18 settlement agreement is $23.7 odd million dollars. Is that 19 correct? 20 A That is correct at that time. 21 Q That is not a true statement today, is it? 22 A That is correct. 23 Q Based on information that you have learned over the 24 last several months about $2 million that you claim was owed, 25 based on canceled loans, you have withdrawn, correct? Going onto Paragraph 11 of your December 7th Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 45 of 197 45 1 A $2 million that was owed based on canceled loans –- can 2 you ask that question again, please. 3 Q 4 declaration you say under oath that KServicing is determined 5 that the full amount owed by Customers Bank to KServicing is 6 more than $23.7 million. 7 A Yes. 8 Q And the reason that is not a true statement anymore is 9 you have come to realize that everything you said in this 10 declaration about $1.94 odd million owed, based on canceled 11 loans, is not correct. 12 A 13 was filed. 14 canceled loans, which was about $3 million, was the correct 15 number of canceled loans. 16 Q 17 that what you asserted, including Paragraph 18 of your 18 declaration, that the amount of canceled loans should have 19 been $1.6 million is not correct; it should be about 20 $3.6 million. 21 A That’s correct. 22 Q So, when you talk about resolving that issue there was 23 no compromise, you just accepted what Customers Bank told you 24 and your counsel. 25 A Sure. In Paragraph 11 of your December 7th, 2022 Well we continued to reconcile after this declaration And we did discover that the original number of Is that a long way of saying that you agree with me We did not just accept that. My understanding that Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 46 of 197 46 1 there was additional research done by Donna Evans and the 2 team. 3 Q 4 you put you and many of your colleagues at KServicing put 5 many days into reconciling all of the available data sources 6 and other sources of information. 7 these calculations are correct. 8 A Yes. 9 Q Your confidence was misplaced as to that nearly $2 10 million on the canceled loan issue, correct? 11 A 12 had available at the time. 13 continued to research the canceled loan I obtained better 14 information. 15 Q 16 statements from November 2020 onward? 17 A 18 statement each month from November 2020 onward. 19 Q 20 month, after month, after month there were millions of 21 dollars in deposits and sometimes millions of dollars in 22 withdrawals? 23 A 24 month, but I realized that there would be deposits and 25 withdrawals each month. In Paragraph 27 of the same declaration you say that You are confident that Do you see that? Well the confidence was based on the information that I And after Donna and team Ms. Williams, have you looked at the Synovus account I cannot say that I have looked at every single Have you looked at them enough to understand that I am not sure –- I cannot speak to the amount each Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 47 of 197 47 1 Q And Kabbage was serving thousands, tens of thousands of 2 loans for Customers Bank? 3 A I am not aware of the number of loans -- 4 Q You don’t –- 5 A -- that were serviced at any time. 6 Q Do you know that the maximum size of the portfolio is 7 about 98,000 loans? 8 A I do not know the count. 9 Q What is your best estimate of how many loans Kabbage 10 serviced for Customers Bank? 11 A 12 have not taken note of the number of loans that would be in 13 service. 14 Q 15 flowing through the Synovus bank account? 16 A 17 in deposits. 18 Q 19 remittances from Customers Bank did Kabbage just keep the 20 borrower remittances in the Synovus account or did it use the 21 money for some other purposes? 22 A 23 stopped –- not withholdings, when remittances were –- when 24 remittances to Customers Bank stopped and we were holding, 25 KServicing was holding the customer payments. I couldn’t guess. I am not on the operations side. I Are you aware that there were millions of dollars I have seen, in particular months, millions of dollars After Kabbage started withholding the borrower I was not with KServicing when withholdings were Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 48 of 197 48 1 Q Did you –- were you ever called upon to account for 2 monies that Kabbage used from the account we just looked at, 3 the Synovus CUBI PPP account. 4 account for Kabbage’s use of those funds for purposes other 5 than paying Customers Bank? 6 A 7 behalf of Customers Bank and there were payments to Customers 8 on behalf of Customers Bank. 9 Q 10 customers, and Customers Bank, were you ever called upon to 11 account for any payments made to anyone else; payments for 12 rent, payments for employee bonuses, payments for 13 electricity? 14 A No. 15 Q Ms. Williams, if you could turn back to your 16 declaration, the December 7th, 2022 declaration, and look at 17 Paragraph 19. In Paragraph 19 you refer to a former CFO of 18 the company. Do you see that? 19 A Yes. 20 Q Is that referenced to a man named Daniel Eidson? 21 A Yes. 22 Q When you came to Kabbage was Daniel Eidson still the 23 CFO? 24 A He was. 25 Q And then during the time you worked for Kabbage he left Were you ever called upon to There were payments to the SBA from those accounts on So, take three parties out of the equation, the SBA, That refers to Daniel. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 49 of 197 49 1 for another job? 2 A Correct. 3 Q And have you stayed in touch with him after he left? 4 A I have not. 5 Q Have you ever spoken to him? 6 A I have not. 7 Q In Paragraph 20 of your declaration, the December 7th 8 declaration, you say that Customers Bank erroneously relied 9 on what you call “preliminary data.” 10 preliminary data provided by KServicing on November 4th. 11 A Yes. 12 Q The email we looked at from November 4th, Tab 3 in your 13 small binder, can you take a look at that. 14 word “preliminary” in there? 15 A I do not see the word “preliminary.” 16 Q In Paragraph 22 of your December 7th, 2022 declaration 17 you talk about a certain file that Daniel Eidson referred you 18 to. Do you see that? 19 A That he referred me to? 20 Q Let’s take it in steps. 21 learned something from Daniel Eidson on November 10th, 2022? 22 A I said we learned, collectively the company. 23 Q Okay. Did Kabbage learn something from Mr. Eidson on 24 November 10th, 2022? 25 A Yes. You say CB used Do you see the In Paragraph 22 you say you Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 50 of 197 50 1 Q And would you agree with me that November 10th is after 2 November 9th? 3 A It is after November 9th. 4 Q Now does the fact that in two years earlier, October 5 2020, KServicing or Kabbage paid Customers Bank some money 6 from another account, a Wells Fargo account. 7 on how much Kabbage collected into the Synovus account in 8 November 2020 on? 9 A 10 if monies were collected in the Wells Fargo account they 11 could not be collected in the Synovus account. 12 Q 13 account it has nothing to do with the Wells Fargo account? 14 A The actual cash, no. 15 Q You agree with me if a borrower paid money after 16 November 2020 into the Synovus account that same money that 17 was collected in the Synovus account couldn’t be paid to the 18 Wells Fargo account. 19 A 20 the Wells Fargo account versus funds –- separate funds 21 collected in the Wells Fargo account versus funds collected 22 in the Synovus account. 23 Q 24 Synovus account only have included deposits made by Customers 25 Bank borrowers after November 2020? Just that there to how much collected. Right. Correct. Does that bear It does because So, if money was collected into the Synovus There would have been separate funds paid in And if Kabbage was doing things correctly shouldn’t the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 51 of 197 51 1 A I am not sure when the Wells Fargo account was closed 2 or not in use. 3 Q 4 account was closed in October 2020 as a result of the Amex 5 transaction. 6 A Okay. 7 Q Pickup with me on November –- in November 2020 when the 8 Synovus account was created. You with me so far? 9 A Yes. 10 Q From that point on, let’s call it November 1st, 2020, 11 should all of the Customers Bank borrowers who made payments 12 on their loans, should all of that money have been deposited 13 into the Synovus account? 14 A From that point forward it should be, yes. 15 Q Paragraph 22, the one that we are still on, refers to a 16 loan return analysis dated February 1st, 2021. 17 that? 18 A Yes. 19 Q And that includes data from January 2021, December 20 2020, November 2020, all the way leading up to February 1st, 21 2021? 22 A 23 the loan return analysis file, was a particular tab dated 24 October 2020. 25 Q I want you to assume with me that the Wells Fargo That –- I can’t attest to that. Do you see My focus on this file, I understand that is your focus, but is the data in the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 52 of 197 52 1 February 1st, 2021 file inclusive up to February 1st, 2021? 2 A I don’t know. I didn’t look at the other data in the 3 file. There are several tabs in the file. 4 Q In Paragraph 22 you say that Mr. Eidson provided you 5 with a copy of this loan return analysis filed dated 6 February 1st, 2021. 7 A 8 directly by Mr. Eidson. 9 Q 10 Mr. Eidson’s email also confirms that he sent a copy of that 11 file to Customers Bank on October 21st, 2020. 12 that? 13 A Yes. 14 Q And that file that you are referring to is Exhibit 2, 15 2021 return analysis? I am just referring to what is in 16 Paragraph 22 of your affidavit. 17 want, but you say that file –- 18 A Oh, yes. 19 Q -- you are referring to –- 20 A Referring to, yes. 21 Q How was Mr. Eidson able to send a file with 22 February 1st, 2021 data in October of 2020? 23 A 24 loan return analysis 2/1/21. 25 oh, I can see the name of the attachment on the email that Do you see that? Well, I was provided with a copy of the file, not You say in your declaration, Paragraph 22, a review of Do you see You can look at whatever you I am not –- the file that I was provided was titled I am not sure if the file –- Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 53 of 197 53 1 Mr. Eidson sent. 2 Q 3 to send information in October 2020 that was about things 4 that happened in November, December 2020, January 2021? 5 A 6 data in the file from future months. Like I said, I did not 7 look at all of the tabs in the file. My focus was on a 8 particular tab dated October 2020. 9 Q 10 the one from December, and let’s take a look at a more recent 11 one, one filed a week ago today. 12 with painstaking care. 13 A To the best of my knowledge at the time, yes. 14 Q You reviewed it before you signed it? 15 A Yes. 16 Q You made sure that each word and each exhibit were 17 truthful and accurate? 18 A To the best of my ability, yes. 19 Q Did the best of your ability include reading it 20 thoroughly? 21 A Yes. 22 Q Comparing exhibits to what is said in the declaration? 23 A Yes. 24 Q Now in this declaration you say you are knowledgeable, 25 I’m looking at Paragraph 2, about the disputed KServicing Do you think it would have been possible for Mr. Eidson No. The file name does not indicate that there was Ms. Williams, you can set aside your first declaration, This one you also prepared Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 54 of 197 54 1 remittance holdbacks. Look at the top of Page 2, I am 2 knowledgeable about and familiar with KServicing’s 3 calculation of the final settlement payment as well as the 4 disputed KServicing remittance holdback as defined in the 5 settlement agreement. 6 A Yes. 7 Q Fair to say, as we have discussed, you joined, in 8 November 2021, after the Synovus account had been 9 established, after the holdbacks started, correct? 10 A Correct. 11 Q And so did you take steps to go back in time and do 12 reconciliations and calculations about what had happened 13 before you joined? 14 A Not unless there was reason to. 15 Q Well, wasn’t there reason to with this reconciliation? 16 A There was and we did. 17 Q Did you? 18 A Well, once I obtained the spreadsheet from Danny, that 19 was prepared by Mr. Eidson, that showed payments returned to 20 Customers Bank, yes, I did go back to October. 21 Q 22 process started November 10th after you spoke to Mr. Eidson? 23 A No. 24 Q What were you doing on November 7th? 25 A On November 7th I assisted Donna with understanding of So, your efforts with respect to this reconciliation I started working with this on November 7th. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 55 of 197 55 1 the canceled loans, the $3 million by referencing a file that 2 was given to me or passed to me by Danny that had a listing 3 of canceled loans that made up the $3 million. I was asked 4 to, kind of, put numbers together that showed the settlement 5 calculation. 6 Q 7 on the canceled loan issue? 8 A 9 which included the canceled loan issue. 10 Q 11 do any reconciliation of the Synovus account? 12 A 13 didn’t not. 14 Q 15 expression “money is fungible?” 16 A Fungible. 17 Q Do you know what that –- 18 A Can you define that for me? 19 Q Let me try with an example. 20 Customers Bank had two borrowers, they each had a $100 loan, 21 payable over, let’s call it, 10 installments. 22 first month $20 comes into the account, $10 from one 23 borrower, $10 from the other borrower. 24 that the practice by Kabbage was to aggregate all that money 25 into one account and then make the appropriate allocations of So, your focus from November 7th to November 10th was It was on both. The settlement calculation as a whole, During the period November 7th to November 10th did you If I did any reconciliation of the Synovus account, I Ms. Williams, do you know what is meant by the If there are –- let’s say So, in the Do you understand Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 56 of 197 56 1 the money? 2 A Yes. 3 Q And so it wasn’t a situation where if I was a borrower 4 and I paid $10 it would go into a special Jeremy Sternberg 5 account. 6 A 7 be accounted for in the loan system applied to the proper 8 loan. 9 Q 10 number, let’s say toward the beginning of the relationship, 11 before Kabbage was withholding money from Customers Bank if 12 $1 million in borrower remittances had come in and Kabbage 13 paid $1 million to Customers Bank, embedded in that 14 $1 million were the borrower payments for hundreds of 15 borrowers, correct? 16 A Correct. 17 Q The money was all pulled into one account and then 18 allocated as appropriate? 19 A Correct. 20 Q There was no special consideration given to my $10, or 21 your $10, or anyone’s particular $10? 22 A Other than applying it to your loan, no. 23 Q So at the –- as we talked about, at the end of each 24 month or whenever the payment period was, Kabbage would pay 25 an aggregate amount to Customers Bank as opposed to a That is correct, it came into one account and it would And in a given month, I’m just going to make up a Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 57 of 197 57 1 thousand different checks or wire transfers for each of the 2 different borrowers? 3 A 4 funds to Customers Bank, yes, an aggregate amount would be 5 sent with the detail as to what that amount represented. 6 Q 7 one from last week, you described a situation in which you 8 assert that Customers Bank was paid twice with respect to 9 five particular loans; once in October 2020 out of a Wells 10 Fargo account and then again as part of a settlement 11 reconciliation process, correct? 12 A 13 the –- I don’t assert that they were paid twice. I do assert 14 that they were paid once from the Wells Fargo account. 15 Q 16 the settlement payment what you’re saying is, in effect, 17 Customers Bank would be paid twice on those five loans 18 amounting to about a million-five. 19 A That is what I am saying, yes. 20 Q Now if that was the case, if Customers Bank was paid 21 twice for these five loans totaling around a million-five, 22 wouldn’t the trial balance for the entire portfolio be off by 23 a million-five? 24 A 25 Customers Bank. If it were during a time that KServicing was remitting Now Paragraph 8 of your more recent declaration, the No. I don’t assert that they were paid twice because If we were to adopt the Customers Bank calculation of The trial balance does not track what has been paid to Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 58 of 197 58 1 Q Let me ask it a different way. We had a definitional 2 problem with trial balance. 3 A Yeah. 4 Q If today, based on the payment that Customers Bank has 5 made, the amount of loans outstanding –- monies leant out, 6 the amount paid to date, and the amount still outstanding all 7 add up. 8 wouldn’t you agree with me that that would throw it out of 9 balance? 10 A 11 have been paid getting to an amount outstanding that 12 difference would represent monies collected or should 13 represent monies collected by KServicing on behalf of 14 Customers Bank’s customers, but it would not indicate whether 15 or not any of that money had been paid to Customers Bank. 16 Q 17 October 2020 there were five borrowers who had aggregate loan 18 payments of a million-five and then there were another five 19 borrowers who had made loan payments of a million-five. If 20 Kabbage had paid Customers Bank for one set of those 21 borrowers, but withheld the money for the other set you would 22 agree with me that there was no double payment, right? 23 A Well, its two different sets of loans. 24 Q Right. 25 you haven’t done a reconciliation of the Wells Fargo account, If we took a million-five out of that equation The reason that the issued loans less everything they Let me give you a scenario, Ms. Williams. Let’s say in What you can’t say, as you sit here, because Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 59 of 197 59 1 is whether Kabbage overpaid, underpaid, or paid exactly the 2 right amount that it should have to Customers Bank from the 3 Wells Fargo account in respect of Customers Bank remittances. 4 A 5 that made up what was paid to Customers Bank from the Wells 6 Fargo account. 7 amounts so I know what made up that payment. 8 Q 9 borrower remittances and all payments made by Kabbage to 10 Customers Bank wouldn’t we have to go back to the beginning 11 of time here to April 2020? 12 A 13 to the beginning. 14 Q And Kabbage hasn’t done that. 15 A I don’t see that it was necessary to do that. 16 Q I am not asking you whether it was necessary or not, 17 I’m just –- as a factual matter, Kabbage didn’t do a loan by 18 loan reconciliation of all accounts, Wells Fargo, Synovus, 19 and any others from the beginning of the relationship? 20 A I don’t know. I have not. 21 Q And the five loans that you are talking about were paid 22 into a Wells Fargo account on or before October 2020, 23 correct? 24 A That is correct. 25 Q Before the Synovus account was setup? I have seen a detailed listing of the dollar amount That detailed listing has loan numbers in If you wanted to do a loan-by-loan analysis all If I wanted to see all of them, I would have to go back Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 60 of 197 60 1 A That is correct. 2 Q And there were thousands of borrowers who made millions 3 of dollars of payments into that Wells Fargo account? 4 A 5 a question? 6 Q It is. 7 A I can’t say how many borrowers would have, but 8 numerous, yes. 9 Q Numerous borrowers with numerous payments, correct? 10 A Yes. 11 Q And if we wanted to reconcile the Wells Fargo account 12 we would have to go back and add up all the borrower 13 remittances and all the payments to Customers Bank, correct? 14 A To reconcile we would have to do that. 15 Q And that wasn’t done during the reconciliation process, 16 was it? 17 A 18 account. 19 Q 20 Wells Fargo account in a Synovus account? 21 A 22 aren’t transactions from a Wells Fargo account in the Synovus 23 account. 24 Q 25 goals of the reconciliation process was to figure out how Oh, I thought that was a statement. I’m sorry, was that There was not a need to reconcile the Wells Fargo Why would there be anything about transactions from a Why would there be anything about transactions –- there Did you understand that the goal of the –- one of the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 61 of 197 61 1 much money had been paid into the Synovus account and 2 withheld from Customers Bank? 3 A That was one of the goals. 4 Q If you look at Tab 4 in the smaller of the two binders 5 you have, what Kabbage told Customers Bank, I’m looking 6 toward the bottom of the page, the bold heading called “Per 7 CUBI remittance file.” 8 A Yes. 9 Q What Kabbage told Customers Bank is that the receipts 10 into the Synovus bank account were about $26.6 million? 11 A 12 remittance file showed $26.6 million. 13 Q 14 about the Synovus bank account. 15 A 16 was being manually tracked prior to the Synovus bank account. 17 Q 18 $497,900. 19 A 20 sure why there would be a variance that large – 21 Q Did you prepare the –- 22 A -- or small. 23 Q I’m sorry, I didn’t mean to cut you off. 24 A I wouldn’t consider that large. Its irrelative. 25 Q You didn’t prepare the CUBI remittance file, did you? No. Do you see that? What Kabbage told Customers Bank was that the Okay. And that remittance file should have been just Not necessarily. The remittance file, as I understand, There is also a variance that is mentioned there, Why would there be a variance that large? I am not sure. I didn’t prepare this file. I am not Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 62 of 197 62 1 A No, I didn’t prepare this particular Synovus borrower 2 repayment account analysis. 3 Q Did you prepare any CUBI remittance files? 4 A I maintained the CUBI remittance file after April 2022. 5 Q So, did you send CUBI a remittance file showing that 6 there were $26,608,962 in borrower remittances? 7 A 8 yes. 9 Q You prepared it and someone else sent it? 10 A I was responsible for the file. 11 under me prepared it, but I was responsible for the file, 12 yes. 13 Q 14 reconciliation process from October 27th, 2022 through 15 midnight November 9th, 2022 have you seen any information 16 conveyed to Customers Bank about a Wells Fargo account? 17 A To November 9th? 18 Q Yes. 19 A I have not seen any information conveyed about a Wells 20 Fargo account. I did not send it, but the file was obtained and sent, In everything that you have seen about the 21 MR. STERNBERG: 22 confer with Mr. Monohan? 23 24 25 One of the accountants THE COURT: Your Honor, may I have a moment to Certainly. (Pause) MR. STERNBERG: Your Honor, Ms. Williams, that is Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 63 of 197 63 1 all the questions I have for now. 2 THE COURT: 3 MR. TSEKERIDES: 4 We have been going a little over an hour, is the 5 witness okay. Okay. Any redirect? Yes, Your Honor. Do you want to take five? 6 THE WITNESS: 7 MR. TSEKERIDES: 8 No, I’m fine. Okay. REDIRECT EXAMINATION 9 BY MR. TSEKERIDES: 10 Q 11 Tsekerides from Weil for the debtors. 12 Good morning, Ms. Williams. Again, for the record, Ted There were numerous borrowers and numerous payments, 13 but how many loans are we talking about in this dispute? 14 A Five. 15 Q You were asked a lot of questions about Synovus 16 accounts, but if a payment was made to Kabbage on account of 17 a CUBI loan prior to November 2020 where would that money go? 18 A 19 time which was a Wells Fargo account. 20 Q 21 loans prior to November 2020? 22 A Yes, they were. 23 Q And they could still do that even though they didn’t 24 have a Synovus account, right? 25 A That would have gone into the operating account at So, was Kabbage collecting money on account of CUBI Correct. the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 64 of 197 64 1 Q You have your declaration up there? 2 A Yes. 3 Q Why don’t you take a look at the December 7th one. 4 were asked some questions about a Mr. Eidson. 5 former CFO, I believe, you said? 6 A Yes. 7 Q How did it come about that you were even looking for 8 Mr. Eidson’s file? 9 A 10 had a discussion with the interim CFO at the time, David 11 Walker, and he asked if I was aware of any payments that had 12 been made to Customers Bank. 13 been made that I’m aware of since I have been with the 14 company, but I’m not sure if the prior CFO had been making 15 payments to Customers Bank. 16 Q And what happened next? 17 A Mr. Walker wondered if the company should reach out to 18 Mr. Eidson to inquire as to whether or not he had made any 19 payments to Customers Bank. 20 Q 21 happened next? 22 A 23 informed me that there had been a conversation with 24 Mr. Eidson and that there was a file that Mr. Eidson had in 25 which showed a number of loans for which he had paid CUBI the You He was the When preparing the preliminary settlement calculation I I said that no payments have And then, from your perspective, what do you know My boss at the time, David Walker, the interim CFO, Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 65 of 197 65 1 funds. 2 Q 3 is the 12/7 declaration. 4 attached to that. 5 A Yes. 6 Q What does that document show? 7 A This is an email that Mr. Eidson sent to employees at 8 Customers Bank on October 21st of 2020. 9 Q 10 included in this exhibit? 11 A Yes. 12 Q If you look at the top of the email it says: “Attached, 13 CUBI payment detail 10/21/20.” 14 A It does. 15 Q And you remember you were asked some questions about 16 loans of 2021. 17 A Yes. 18 Q This file is 2020, right? 19 A It was. 20 Q And what do the items on the attachment refer to? 21 A What items on the attachment? 22 Q The spreadsheet. 23 A These are loans for which Customers Bank were paid 24 funds from the Wells Fargo account. 25 Q Okay. So, let’s take a look at that declaration. Okay. This There’s an Exhibit 3 that is Let me know when you are there. If you flip to the end is the attachment also This is the attachment that was with the email. Right? Do you remember that questioning? What do those refer to? So, this is money that Kabbage sent to Customers Bank? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 66 of 197 66 1 A Yes, it is. 2 Q Now when you looked at this document, the attachment 3 from Mr. Eidson, what did you do with it? 4 A 5 remittance file to see if there were any loans and payments 6 on the remittance file that were on this document as having 7 already been paid to Customers Bank. 8 Q 9 referring to there? 10 A 11 tracking of Customer payments collected for Customers Bank. 12 Q 13 Exhibit 4, and I am going to focus on that first page that 14 counsel referred to as well. 15 A Customers 4? 16 Q Right. 17 Bank on it. 18 A Yes. 19 Q You have it? 20 A Yes. 21 Q Exhibit 4 is in front of you? 22 A Yes. 23 Q Okay. 24 file?” 25 A When I looked at this document I compared it to the And when you say the remittance file what are you I am referring to the remittance file showing the So, if you take a look at what was Customers Bank Yes. Let me know when you are there. This is the –- it might say CUBI or Customers It’s the thinner binder. You see where it says: “Per CUBI remittance Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 67 of 197 67 1 Q Okay. 2 talking about that you compared Mr. Eidson’s file to? 3 A Yes, it is. 4 Q And what did you find out when you compared those two? 5 A When I compared the two, I found that there were five 6 loans with related payments in the remittance file that were 7 also on the file of Mr. Eidson’s that showed payments already 8 sent to Customers Bank. 9 Q 10 of the settlement reconciliation. 11 A Yes. 12 Q Wasn’t one of the goals to determine how much money was 13 actually withheld from Customers Bank and how much was 14 actually paid to Customers Bank? 15 A Yes, it was. 16 Q Okay. 17 five loans that were also on the remittance were already 18 paid. What did that conclude for you? 19 A That concluded for me that the amount on the remittance 20 file, as owed, was really less than the actual –- the actual 21 amount owed was really less then what was on the remittance 22 file. 23 Q 24 they have been on the remittance file? 25 A Okay. Is that the same remittance file that you are And you were asked some questions about the goal Do you remember that? So, what did you determine whether or not these So, if those five loans were already paid shouldn’t No. They should not have been. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 68 of 197 68 1 Q 2 would that do to the settlement calculation? 3 A 4 additional $1.5 million. 5 Q Why is that? 6 A Because Customers Bank had already been paid that 7 $1.5 million and in their settlement calculation they were 8 including that $1.5 million as owed. 9 Q Did you prepare an updated settlement calculation? 10 A I did prepare an updated settlement calculation. 11 Q Can you turn to what’s in the bigger binder, 12 Exhibit 25? 13 A Exhibit 25. 14 Q I entered a lot of tabs in there, it should just be a 15 25 with no lettering or anything. 16 A Okay. 17 Q Are you there? 18 A I am. 19 Q Okay. 20 A This is the updated settlement calculation. 21 Q And who prepared this? 22 A I prepared this. 23 Q Where on this will we see –- strike that. 24 25 And having them come out of the remittance file what It would indicate that Customers Bank owed us an What is this document? Did you make an adjustment to account for the remittance updated information that you found from Mr. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 69 of 197 69 1 Eidson’s file? 2 A I did make an adjustment to account for that. 3 Q Where do we see that on this document? 4 A You see that on the borrowed principal repayments and 5 returns for remittance file. 6 Q 7 have as $25.5? 8 A The totals, yes. 9 Q And is that delta roughly the one-five-five number? 10 A It is. 11 Q Did you understand that the reconciliation was to stop 12 on November 9th? 13 A I did not. 14 Q Did you understand that the reconciliation was to stop 15 even if the numbers were completely wrong? Is that the one that CUBI has as $27.1 roughly and you 16 MR. STERNBERG: Your Honor, I object. The 17 reconciliation period, kind of further to Mr. Tsekerides 18 objection during my examination, is defined in the settlement 19 agreement. 20 21 22 The witness’s understanding of it is –THE COURT: Yeah, I understand. What is the relevance of the witness’s understanding of –MR. TSEKERIDES: He asked her questions about it 23 stopping and I’m asking her if she had an understanding. 24 he solicited testimony about her understanding. 25 THE COURT: All right. I think that’s fair to So, Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 70 of 197 70 1 follow-up. I will allow you to solicit an answer. 2 MR. TSEKERIDES: Thank you. 3 BY MR. TSEKERIDES: 4 Q 5 understanding if the reconciliation was supposed to stop on 6 November 9th? 7 A 8 until we got to the right number. 9 10 Ms. Williams, the question was did you have an No. My understanding was that we were reconciling MR. TSEKERIDES: Can I have one moment, Your Honor? 11 THE COURT: 12 You may. (Pause) 13 MR. TSEKERIDES: This is the last question. 14 BY MR. TSEKERIDES: 15 Q 16 Customers Bank owes on the settlement payment? 17 A 18 What is the total amount that the debtors believe that $1,555,656. MR. TSEKERIDES: 19 questions, Your Honor. 20 THE COURT: 21 MR. STERNBERG: 22 THE COURT: 23 Thank you. Thank you. I have no further Recross? Nothing further, Your Honor. Thank you, Ms. Williams. down. 24 THE WITNESS: 25 (Witness excused) Thank you. You can step Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 71 of 197 71 1 THE COURT: 2 MR. TSEKERIDES: 3 Mr. Tsekerides, whereto from here? will go with Ms. Evans, who I believe is outside. 4 THE COURT: 5 MR. TSEKERIDES: 6 THE COURT: Okay. MR. TSEKERIDES: THE COURT: 12 MR. TSEKERIDES: THE COURT: Okay. Give me one second. MR. TSEKERIDES: THE COURT: 19 MR. STERNBERG: 20 THE COURT: 21 342 and accompanying exhibits, Any objection? No objection. They will be admitted. (Evans Declarations received into evidence) 22 THE COURT: So, Ms. Evans, if you could take the stand. 24 25 I’m sorry, you and Docket 672. 18 23 I don’t think I did that earlier. just said this, but its Docket Items 342 and –- 16 17 While they’re retrieving her I These would be Docket 342 and Docket 672. 14 15 So, you’re retrieving did want to move in those declarations for Ms. Evans. 11 13 We already moved those in, so Ms. Evans. 9 10 Okay. cross. 7 8 Yeah, so I think from here we Ms. Barksdale, if you wouldn’t mind swearing the witness. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 72 of 197 72 1 DONNA EVANS, WITNESS FOR DEBTORS, SWORN 2 THE CLERK: 3 your last name for the record. 4 5 Please state your full name and spell THE WITNESS: Donna Robinson Evans, R-O-B-I-N-S-O- N, E-V-A-N-S. 6 THE CLERK: 7 MR. STERNBERG: 8 THE COURT: 9 You may be seated. May I proceed, Your Honor? You may. CROSS-EXAMINATION 10 BY MR. STERNBERG: 11 Q Good morning, Ms. Evans. 12 A Good morning. 13 Q You have submitted, at least, two declarations in this 14 matter? 15 A Yes. 16 Q One was in December of last year, one was a week ago. 17 A Yes. 18 Q The one in December of last year criticized Customers 19 Bank for using a figure for the canceled loan amount aspect 20 of the settlement reconciliation process which you claim that 21 Customers Bank was off by about $2 million, correct? 22 A Yes. 23 Q And you since have abandoned that? 24 A That is not part of today’s –- I mean it’s not a point 25 that I know we’re discussing today. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 73 of 197 73 1 Q You agree with Customers Bank the calculation of that 2 issue? 3 A 4 December I went back and we did additional research, and we 5 actually learned that the data points on the initial list of 6 $3.6 million is actually the list of canceled loans, and that 7 is the correct number. 8 Q So, Ms. White’s declaration was correct? 9 A If she stated it was $3.6 million, which her feedback 10 was that it was $1.6 million. 11 research. 12 Q Have you read Ms. White’s declaration? 13 A Yes. 14 Q The most recent declaration you filed was a week ago? 15 A Yes. 16 Q And that one is primarily about the trial balance 17 document that Ms. White prepared and that has been shared 18 with you and the Customers Bank team? 19 A Yes. 20 Q Before we get to that declaration there are two binders 21 on that desk, one is thicker, one is thinner. 22 look at the thinner one and please turn to Tab 3. 23 A Yes. 24 Q Do you see there, Ms. Evans, an email from you to 25 Alyssa White and others dated November 4th, 2022? No. After the document that Ms. White filed in So, we had done additional If you could Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 74 of 197 74 1 A Yes. 2 Q During the reconciliation process did you understand 3 the settlement agreement called for a reconciliation of 4 certain items including the amount of money that Kabbage had 5 held back in borrower payments from Customers Bank? 6 A I do understand that, yes. 7 Q And you were a key figure in the reconciliation 8 process? 9 other information with Customers Bank during that process? 10 A Yes. 11 Q And among the information you shared was information 12 about the Synovus bank account, correct? 13 A You shared information that is here in Tab 3 and Yes. 14 MR. STERNBERG: I may get to this during Ms. 15 White’s examination, Your Honor, but just since we’re on it I 16 move into evidence Tab 3. 17 THE COURT: 18 MR. TSEKERIDES: 19 THE COURT: 20 Any objection? No objection. It will be admitted. (Customers Bank's Exhibit 3 received into evidence) 21 BY MR. STERNBERG: 22 Q 23 Alyssa, Michele. 24 Vervlied? 25 A Take a look at your email, Ms. Evans, starting off Correct. That is to Alyssa White and Michele Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 75 of 197 75 1 Q Those are both employees at Customers Bank? 2 A Correct. 3 Q People you have worked with for a long time? 4 A Yes. 5 Q You say Synovus account analysis, correct? 6 A Correct. 7 Q You understood that during the reconciliation process 8 one of the tasks was to reconcile the borrower payments into 9 the Synovus account, yes? 10 A Yes, those were the tasks. 11 Q During the reconciliation process did you send any 12 information to Ms. White, Ms. Vervlied, or anyone at 13 Customers Bank about a Wells Fargo account analysis? 14 A I did not. 15 Q In the body of your email that is now Exhibit 3 you 16 say: 17 “KServicing has performed an analysis of the activity 18 in the Synovus account from inception to October 3rd, 2022 19 reconciling the activity in that account to our remittances 20 file.” 21 Did I read that correctly? 22 A You did. 23 Q When you say “that account” you are talking about the 24 Synovus account, yes? 25 A Yes. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 76 of 197 76 1 Q 2 the reconciliation was solely of the Synovus account? 3 A 4 Synovus account and this is the information that was provided 5 to us by the acting CFO at the time. 6 Q Acting CFO of Kabbage? 7 A Yes. 8 Q And when we talk about this information we’re talking 9 about Synovus account analysis, correct? 10 A Correct. 11 Q And we’re talking about Synovus bank account 12 statements? 13 A Correct. 14 Q And particularly the bank statements. 15 uniquely within the Kabbage control? 16 A Correct. 17 Q Take a look if you would at Tab 4 of the same binder. 18 So, the analysis that you understood was happening for My understanding is that the analysis included the MR. STERNBERG: Those were Your Honor, if it’s okay with you 19 and Mr. Tsekerides I will refer to this as Exhibit 22 since 20 we are going to have that as a complete exhibit. 21 MR. TSEKERIDES: 22 THE COURT: That’s fine. Okay. 23 BY MR. STERNBERG: 24 Q 25 read just that one page of Exhibit 22? Ms. Evans, let us know when you have had a chance to Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 77 of 197 77 1 A I’ve had a chance. 2 Q Who prepared this cover page, this –- what is called 3 KServicing, Synovus borrower repayment account analysis 4 October 3rd, 2022. 5 A My understanding is our accounting team. 6 Q Kabbage accounting team? 7 A Kabbage, yeah. 8 Q The title of the document is Synovus borrower repayment 9 account analysis, correct? 10 A Correct. 11 Q During the reconciliation process did you see a 12 document called Wells Fargo borrower repayment account 13 analysis? 14 A I did not. 15 Q Did you ask anyone to prepare such a document, a Wells 16 Fargo account analysis? 17 A I did not. 18 Q According to this front page of Exhibit 22 the entry 19 entitled “Borrower repayments per remittances file” is 20 $26,608,962, is that correct? 21 A Correct. 22 Q And is that what Kabbage communicated to Customers Bank 23 is the amount of withheld borrower remittances in the Synovus 24 account? 25 A Yes. This is what was sent on November 4th. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 78 of 197 78 1 Q There’s also an entry, if you will, called remaining 2 variants to be resolved. Its nearly $500,000. 3 A 4 that, but that was an amount that needed to be reconciled. 5 That is my understanding at that point. 6 Q 7 had come in from Customers Bank borrowers after the 8 remittances file had gone out that needed to be added to the 9 $26.6 million? 10 A 11 definitively. 12 Q 13 is? 14 A 15 accounting team was working through. 16 Q 17 binder, you understood that this email, your November 4th 18 email to Ms. White and others was conveying important 19 information for the reconciliation process? 20 A I do understand that. 21 Q And did you understand that Customers Bank was relying 22 on that information? 23 A 24 did not know if they were relying on other information. 25 Q What is that? Our accounting team can speak in more detail about Is it your understanding that there were monies that That is not my –- I mean I can’t say yes or no Do you just not know what this half a million dollars Right. That is part of the calculation that our Going back to what is now Exhibit 3, Tab 3 in your I understood they were relying on this information. Fair point. You didn’t know the entirety of what I Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 79 of 197 79 1 Customers Bank was relying on, but you knew that this was 2 information that you and your team were providing during the 3 reconciliation was information that Customers Bank would be 4 relying on? 5 A Yes. 6 Q In this email, that is Exhibit 3, do you use the word 7 “preliminary?” 8 A I do not. 9 Q Do you convey in any way to Customers Bank that the 10 information is not reliable? 11 A I do not. 12 Q I want to go to your most recent declaration, the one 13 from a week ago. 14 it was accurate before you signed it? 15 A Yes. 16 Q And in doing so –- strike that. I take it you read that and were satisfied 17 In your most recent declaration you criticize the 18 accuracy of the trial balance that Alyssa White used to 19 create her trial balance analysis? 20 A 21 data point that I believe Customers Bank uses for the trial 22 balance. 23 Express systems. 24 Q 25 American Express during Customers Bank relationship with The details in the declaration focuses on a specific That is one of the outputs from the American Customers Bank had no independent relationship with Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 80 of 197 80 1 Kabbage, correct? 2 A Not that I am aware of. 3 Q American Express came to the party because Kabbage did 4 a transaction with American Express? 5 A That is my understanding. 6 Q In a sense, American Express was introduced to the 7 relationship in that manner? 8 A That is my understanding. 9 Q After American Express acquired whatever assets it 10 acquired of Kabbage’s, did American Express take over certain 11 financial reporting functions a part of the servicing that 12 Kabbage was doing. 13 A 14 that the financial reporting for the KServicing business. 15 Q What automated reports? 16 A A report –- my understanding that was created prior to 17 the acquisition that created an output of data points 18 regarding a portfolio that was automatically delivered into 19 the Customers Bank data environment via an asset TP 20 connection each day. 21 Q 22 conversations that you have had with the Customers Bank team 23 a desire by the Customers Bank team to harmonize the 24 information it was getting from Kabbage and American Express? 25 A They provided automated reports, but I would not call Its one of the sources of many meetings, many That’s accurate. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 81 of 197 81 1 Q Were there frequently differences between what was 2 being reported by Kabbage and what was being reported by 3 American Express? 4 A There were discrepancies. 5 Q Ms. Evans, fair to say you know which trial balance Ms. 6 White used to construct her total portfolio analysis? 7 A 8 file. 9 Q 10 White on November 9th? 11 A That was a list of transaction data, correct? 12 Q Just so we’re singing off the same sheet of music, 13 could you take a look at Exhibit 14 in the small binder? 14 A Correct. 15 Q Is that the email by which your colleague, Tim Keith, 16 communicated to Ms. White the trial balance data? 17 A 18 with the Customers Bank team. I do. I don’t know how it was created, but I know the I file that Yes. your colleague, Tim Keith, sent to Alyssa Following a meeting we had to review that data 19 MR. STERNBERG: 20 THE COURT: 21 MR. TSEKERIDES: 22 THE COURT: 23 Your Honor, I offer Exhibit 14. Any objection? No objection, Your Honor. It will be admitted. (Customers Bank's Exhibit 14 received into evidence) 24 BY MR. STERNBERG: 25 Q Ms. White, in your declaration, which is all of three Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 82 of 197 82 1 and a half pages, you don’t point to any particular error 2 that you say Ms. White made in her total trial balance 3 analysis, do you? 4 A I do not. 5 Q You just say you think relying on whatever she relied 6 on would be inherently inaccurate and unreliable, correct? 7 A 8 was the document she used to create the Customers Bank trial 9 balance. 10 Q 11 now are you satisfied that the data points she used was 12 reliable? 13 A 14 were used within the Customers Bank team outside of the 15 KServicing data to create the trial balance. So, I can’t 16 answer that definitively. 17 Q 18 what she relied on was inherently inaccurate and unreliable? 19 A 20 information. 21 Q 22 declaration? 23 A 24 was created and built. 25 Q Correct; although, I was not aware until now that this I take it you would have a different –- knowing that I’d have to understand the different data points that So, fair to say you can’t now definitively say that I can’t say yes or no either way until I have more So, would you want to withdraw that part of your Not without further understanding of how the document You just said don’t know one way or the other as you Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 83 of 197 83 1 sit here now? 2 A Correct. I need to look at more data. 3 Q In your declaration from last week, March 13th, 2023, 4 you don’t proffer an alternative total trial balance 5 analysis, do you? 6 A I did not. 7 Q And you don’t proffer your own version of how this 8 total trial balance analysis meshes with the settlement 9 payment made by Customers Bank? 10 A I do not. 11 Q Is that because you haven’t done that –- when I say 12 “you” Kabbage hasn’t done that analysis? 13 A I haven’t done that. 14 Q Do you know whether anyone on the Kabbage team has done 15 that? 16 A Other members of our team have done analysis. 17 Q Let me be specific about the analysis I am asking 18 about. 19 a total trial balance analysis of the entire Customers Bank 20 portfolio and analyzed it in terms of the settlement payment 21 that Customers Bank made to Kabbage? 22 A 23 pieces, but not as you described it. 24 Q 25 basic core job of a servicer, is to keep track of all the Has anyone from Kabbage, to your knowledge, prepared At the current time not in one document, in different Would you agree with me that the job of a servicer, the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 84 of 197 84 1 money its collecting on behalf of its client? 2 A I would agree with that. 3 Q And that job –- do you know how many loans 4 approximately in the portfolio that Kabbage is servicing for 5 Customers Bank? 6 A 99,365. 7 Q And of that 99,365 loans the obligation would be to all 8 99,365 to accurately track all the loans? 9 A I agree with that. 10 Q It wouldn’t be just to pick out five particular loans 11 and do an analysis based on those? 12 A No. 13 Q Ms. Evans, for many months during your tenure at 14 Kabbage have you participated in weekly and monthly meetings 15 with the Customers Bank team including Alyssa White, Michel 16 Vervlied and others? 17 A Correct. 18 Q Was one of the issues that was discussed regularly at 19 those meetings discrepancies between what Kabbage was showing 20 at borrower balances and what Customers Bank’s internal 21 analysis showed? 22 A That is accurate. 23 Q And at one point in time, toward the end of September, 24 early October 2022 were there approximately 13,000 loans that 25 had discrepant balances? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 85 of 197 85 1 A I don’t recall the number. 2 Q Do you recall that there were thousands of loans with 3 discrepancies? 4 A 5 loans, a large number. 6 Q 7 any effort by Kabbage to reconcile the thousands of loans and 8 millions of dollars paid into the Wells Fargo account, 9 correct? 10 A It does not. 11 Q To your knowledge no one at Kabbage has done that? 12 A Can you repeat the question again? 13 Q Sure. 14 back in time and reconciled all of the payments made into the 15 Wells Fargo account and all of the payments made out to 16 Customers Bank? 17 A I recall there were discrepancies with a number of We are working to resolve them. And your declaration doesn’t provide any information on To your knowledge has anyone at Kabbage gone Not that I am aware of. 18 MR. STERNBERG: 19 THE COURT: 20 You may. (Pause) 21 22 May I have a moment, Your Honor? MR. STERNBERG: Your Honor, Ms. Evans, nothing further. 23 THE COURT: 24 // 25 // Okay. Redirect, Mr. Tsekerides. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 86 of 197 86 1 REDIRECT EXAMINATION 2 BY MR. TSEKERIDES: 3 Q 4 from Weil for the debtors. 5 Ms. Evans, do you have the shorter –- Ted Tsekerides Do you have the smaller binder? 6 A Yes. 7 Q You were asked –- let me get the three in front of you, 8 please. 9 A Yes. 10 Q This was an email you referred to, its dated 11 November 4th. 12 A Yes. 13 Q Why did you send this over to Customers Bank on 14 November 4th? 15 A 16 had a number of meetings, different meetings, with the 17 Customers Bank team to work on reconciliation efforts. 18 the morning of that Friday, the 4th, when this email was sent 19 there was a meeting with Andrew Sachs and Michele, and Sal 20 Cafeti [phonetic] from the KServicing team and myself where 21 there was a request to deliver all files available at the 22 current stage they were in by end of day, as soon as 23 possible. 24 Q 25 this? Do you see that? After the settlement was signed the week of the 31st we On Was KServicing done with its analysis when you sent Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 87 of 197 87 1 A We were not. 2 Q On November 4th was KServicing aware of a file that 3 that Danny Eidson had referred Ms. Williams and others to? 4 A No. 5 Q On November 4th was Kabbage aware of payments that had 6 been made to Customers Bank from a Wells Fargo account? 7 A No. 8 Q Was one of the purposes of the reconciliation to 9 determine how much was withheld and/or paid to CUBI on 10 various loans? 11 A Yes. 12 Q Take a look at Exhibit 22, it’s in the bigger binder. 13 Let me know when you’re there? 14 A Yes, I’m here. 15 Q You were shown, the first page has a box with a bunch 16 of numbers in it. 17 A Yes. 18 Q Okay. 19 refer to? 20 A 21 KServicing that was owed to the Customers Bank team. 22 Q 23 of loans and it would be hard to reconcile all these loans. 24 Were there specific loans identified in the remittance file? 25 A Under per CUBI remittance file what does that The amount of money that had been held back by And you were asked a lot of questions about thousands Correct. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 88 of 197 88 1 Q And were those the loans that were going to be looked 2 at for purposes of deciding what the settlement amount was? 3 A Yes. 4 Q And if loans that were in that remittance file had 5 already been paid should they have been in the remittance 6 file? 7 A No. 8 Q Now you have testified you’ve had a lot of 9 conversations with people from Customers Bank? 10 A Yes. 11 Q Okay. 12 conversations that this reconciliation had to be done by 13 November 9th? 14 A No. 15 Q Did they ever say anything to you that would make you 16 believe that it didn’t have to be done by November 9th? 17 A No. 18 Q Did they say anything to you that the reconciliation 19 process would continue even past November 9th? 20 A 21 call where we discussed the exhibit that we just looked at. 22 And the call ended with Andrew Sachs from the Customers Bank 23 team highlighting to those on the call, which was myself, 24 Sal, Andrew Sachs, Albert Merkin, Alyssa White, and Michele 25 from the Customers Bank team, that we had through the weekend Our team did a loan-by-loan level analysis. Did they ever tell you in any of those They did. There was a call on November 9th, the same Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 89 of 197 89 1 to continue working on reconciliation. 2 Q Would the weekend take you past November 9th? 3 A Yes. 4 MR. TSEKERIDES: 5 THE COURT: 6 MR. TSEKERIDES: 7 THE COURT: 8 MR. STERNBERG: 9 One moment, Your Honor. Certainly. No further questions, Your Honor. Okay. Any recross? I do have some recross, Your Honor. 10 THE COURT: 11 Okay. You can proceed. RECROSS-EXAMINATION 12 BY MR. STERNBERG: 13 Q 14 November 7th for the hearing on entering the settlement 15 agreement? 16 A Here in the room? 17 Q Or zooming in? 18 A I was not. 19 Q Were you part of that hearing? 20 A I was not. 21 Q Were you aware that there was a hearing on November 7th 22 on Kabbage’s motion to enter the settlement agreement? 23 A I am aware of that. 24 Q And so November 4th, when you sent Exhibit 3 and other 25 emails that evening that was a Friday night, correct? Ms. Evans, forgive my memory on this, were you here on Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 90 of 197 90 1 A It was Friday night. 2 Q And the hearing was the following Monday morning? 3 A Correct. 4 Q And was it your understanding that the Court could have 5 entered the settlement order that day? 6 A I don’t have an understanding either way. 7 Q Did you have an understanding that there was some 8 urgency on Friday night because if the settlement order 9 entered on Monday that would be the effective date? 10 A 11 understanding on the urgency was resolve the issues and get 12 to the right number as quickly as possible. I did not have 13 clarity it was tied to the settlement. 14 Q 15 settlement agreement that extended the reconciliation period? 16 A That is not my understanding on the urgency. Are you aware of any written amendment to the I am not aware of that. 17 MR. STERNBERG: 18 THE COURT: 19 MR. TSEKERIDES: 20 THE COURT: Nothing else, Your Honor. Okay. Nothing further. Ms. Evans, thank you for your 21 testimony. You can step down. 22 (Witness excused) 23 THE COURT: 24 MR. TSEKERIDES: 25 My moment. Mr. Tsekerides, whereto from here? I’m sorry, Your Honor, one Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 91 of 197 91 1 2 THE COURT: Certainly. (Pause) 3 MR. TSEKERIDES: Those are the witnesses that the 4 debtors have. 5 Ms. White declaration and exhibits, but I think that is the 6 next step that they would move in their own witness’s 7 declaration. 8 couple of paragraphs there, but I will leave that to them, 9 but that is the next step in the process. 10 11 We do have some collateral disputes on the Mr. Slack is going to handle that. It will be a THE COURT: Okay. So, in terms of the debtor’s affirmative case, on an evidentiary basis, you are now done? 12 MR. TSEKERIDES: 13 THE COURT: 14 Can I ask you this, about how long do you think we 15 are –- I am just trying to figure out what is a sensible time 16 to break. I am pretty flexible, but I want to be courteous to 17 others. 18 Correct. Okay. MR. STERNBERG: Thank you, Mr. Tsekerides. Your Honor, our plan is to move in 19 Ms. White’s December 7th, 2022 declaration and exhibits; 20 although, I think only three of those exhibits are germane to 21 the dispute today. 22 of her to bring us from December 7th to today. 23 her for cross-examination. 24 25 Then I have got a very short live direct THE COURT: Okay. least, begin that process? Then tender Any reason we shouldn’t, at Mr. Slack. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 92 of 197 92 1 MR. SLACK: You know, Your Honor, I would expect 2 maybe about half hour, 45 minutes of cross-examination, you 3 know, depending on what the direct, I haven’t heard yet, 4 looks like. 5 So, that is, I think, where we are. THE COURT: Okay. Given where we are in time what 6 do the parties think about doing the direct, seeing where we 7 are, and then having a conversation then about whether to go 8 directly into cross or to take a break at that point. 9 MR. SLACK: That sounds fine. My only request, 10 Your Honor, is maybe a five minute or 10 minute break for 11 nature. 12 THE COURT: Certainly. 14 MR. SLACK: Yeah, that’s what I would suggest. 15 THE COURT: Okay. 13 Should we do that at this point? Fair enough. So, why don’t we 16 recess for seven minutes and come back at –- actually, why 17 don’t we resume at noon. 18 evidence, the direct, and then we will see where we are. 19 We will do the moving into So, with that we are in recess until 12 o’clock. 20 (Recess taken at 11:48 a.m.) 21 (Proceedings resumed at 12:00 p.m.) 22 THE CLERK: All rise. 23 THE COURT: Please be seated. 24 MR. STERNBERG: 25 THE COURT: Your Honor, may I call Ms. White? Certainly. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 93 of 197 93 1 MR. STERNBERG: While Ms. White is taking the 2 stand I would like to offer her December 7th, 2021 3 declaration and Exhibits 1, 3 and what’s 3-A to her 4 declaration, but its already in evidence as 22. 5 THE COURT: Okay. So, let’s slow down. So, first 6 you have moved in her declaration which is, if you don’t 7 mind, are you able to identify that by docket number that 8 would be super helpful. 9 MR. STERNBERG: It is –- may I approach Ms. White? 10 I think it’s on the declaration. 11 THE COURT: 12 MR. STERNBERG: 13 THE COURT: Certainly. Oh, I see, is it 337? I think that’s an earlier one. Oh, I see, 358. All right. So, you 14 moved into evidence the declaration that is at D.I. 358. 15 Mr. Slack, it looks like you have –- 16 MR. SLACK: Yes. We have a limited objection to 17 the declaration and one of the exhibits. 18 is to Paragraphs 23 and 24 of the declaration which relate to 19 a trial balance analysis. 20 admission of –- 21 THE COURT: 22 first. 23 issue. So, our objection Then we also object to the All right. Let’s take the declaration Let’s go one paragraph at a time so that I get each 24 MR. SLACK: Okay. 25 THE COURT: That way I’m less likely to get it Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 94 of 197 94 1 wrong if we do it, sort of –- if we isolate the moving parts. 2 MR. SLACK: I would say that they are related, 4 THE COURT: Okay. 5 MR. SLACK: But that is fine. 3 Your Honor. Your Honor, 23 and 6 24 relate to a trial balance analysis and we have two 7 objections to it. 8 calculation of the settlement payment that was submitted by 9 Customers Bank was not based on any kind of trial balance 10 analysis. It was based on a very different analysis related 11 to the remittance file and that is set forth in their own 12 exhibit. 13 Number one, the settlement payment and the More importantly, Your Honor, as soon as we 14 received the declaration we asked Customers Bank for all the 15 backup to the trial balance analysis. 16 the exhibits that we have on our exhibit list which is 17 Exhibits 30 through 36. 18 they relate to this objection that we have to Ms. White’s 19 declaration at 23, 24. Your Honor, this was There was an objection to those, but 20 What the proffer of these exhibits show is that 21 right after we received the declaration we asked Customers 22 Bank for all of the documents that relate, all of the work 23 product, the spreadsheets so that our clients could analyze 24 and do whatever, and we recreate, and understand whatever 25 work was done. We received a letter, that is our Exhibit 30, Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 95 of 197 95 1 back saying, no, that was the answer to that. Interestingly 2 enough, what we were told is that while much of the 3 information was information we received it was clear, based 4 on that letter, because it said much of it that was, in fact, 5 and as the Court would know, that there, obviously, was work 6 that was done on this trial balance analysis that we never 7 received. 8 So, we wrote back and we said, look, we need this 9 and we were, again, told no, but we will give you a one page 10 analysis. 11 they’re Exhibit 13. 12 work product, any of the background. 13 tied A to B or given –- there’s information in that one sheet 14 that says that they used, for example, Customers Bank’s 15 general ledger. 16 know what they used, what they didn’t, how they did their 17 calculations. 18 So, they gave us a one page analysis which is now They still have not given us any of the They haven’t, you know, We haven’t received any of that. Ms. White, in her declaration, for example, says 19 there was a series of people who did work. 20 what work they did. 21 had. 22 We don’t We don’t know We don’t know what instructions they We know none of that. THE COURT: So, the basis for your objection is 23 they’re putting this forward and you were deprived of the 24 opportunity, in discovery, to test it? 25 MR. SLACK: Exactly, Your Honor. We said, look, Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 96 of 197 96 1 you want us to make this a formal request. 2 don’t need a formal request, we are just saying no. 3 told them, in our letters, that we were going to raise this 4 issue that if we didn’t get any of the background we didn’t 5 think it was fair, you know, to put on an analysis that we 6 have literally had no opportunity to have any information on 7 whatsoever, zero. 8 THE COURT: Okay. 9 MR. STERNBERG: They said we So, we What is your response? Your Honor, if we’re talking about 10 fairness Ms. White’s –- first of all, I hope the Court will 11 hear from Ms. White the total trial balance analysis that she 12 did was very much part of the settlement reconciliation. 13 was the bank’s way of doing a belts and suspenders analysis. 14 So, its highly relevant and it was done contemporaneously. 15 THE COURT: It What is your response to the question 16 that he asked you for the backup so he could understand it, 17 and you didn’t produce it, and you shouldn’t be allowed to 18 come forward with information without giving your opponent a 19 chance to test it. 20 MR. STERNBERG: We have given –- this is the 21 document. 22 it shows each input. 23 have it all. 24 there was a discovery issue make a motion. 25 Exhibit 13 is what Ms. White prepared and in it, They have it all and we told them they What is curious about this is if they thought THE COURT: I understand. All right, here is what Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 97 of 197 97 1 I am going to: I am going to take this –- I am going to allow 2 you to proceed, I am going to bracket the disputed portion, 3 and I will look at that –- I think I will make a smarter 4 decision once I’ve heard it and thought about it then I would 5 if I make a decision now. 6 of, without prejudice and then consider the question at the 7 end. So, I am going to proceed, sort 8 MR. STERNBERG: 9 one piece to what I have already said. 10 document that Ms. White prepared. 11 I mean, I don’t know that anybody needs the backup math. 12 each component of it is described and it’s something that 13 Kabbage provided to Customers Bank. 14 I think, of last week if they had any questions, Ms. White 15 would be happy to answer them. 16 sense she is going to answer some of those questions now. 17 If I might, Your Honor, I’d add We provided the She can talk about math. But We offered as recently, Here we are, I suppose in a MR. SLACK: I have to say that that just didn’t 19 THE COURT: All right, well –- 20 MR. SLACK: You know, in fact, there was a 18 happen. 21 statement by counsel that said we would have a meeting where 22 we would go over it. 23 the phone without doing it. 24 25 THE COURT: We had that meeting and they got off So, that just never happened. Look, I understand the parties’ positions on this. I am going to allow the evidence to Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 98 of 197 98 1 proceed and will resolve the questions of the admissibility 2 after I understand more about the lay of the land. 3 that you can proceed. So, with 4 Oh, I’m sorry, Ms. Barksdale, if you could swear 5 the witness. And thank you for letting me know that I made a 6 mistake. 7 MR. STERNBERG: 8 White’s declaration and the exhibits? 9 THE COURT: Your Honor, have you received Ms. What I have done is the parts that are 10 unobjected to are admitted. 11 Mr. Slack’s objection are lodged, let’s call it, and we will 12 address the question of their admissibility when I understand 13 it better. 14 The parts that are subject to (White Declaration received into evidence) 15 MR. STERNBERG: Very well. I think what we are 16 talking about there is Paragraphs 23 and 24, and our 17 Exhibit 13. 18 19 20 THE COURT: Right. I take it have you moved other exhibits into evidence? MR. STERNBERG: Two of them are already in. I am 21 moving Exhibit 1 into evidence as well from Ms. White’s 22 declaration. 23 in the evidence as part of –- 24 25 I think it’s the one exhibit that remains not THE COURT: Okay. I’m sorry, its Exhibit 1 of her declaration or Exhibit 1 from your binder? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 99 of 197 99 1 MR. STERNBERG: Both. 2 THE COURT: 3 Mr. Slack, any objection to the introduction into Okay. It’s the same thing. 4 evidence of Exhibit 1? 5 MR. SLACK: That is the calculation. THE COURT: So, that will be admitted. 6 objection. 7 8 (Customers Bank's Exhibit 1 received into evidence) 10 THE COURT: Are there any other evidentiary matters before you turn to your testimony? 12 MR. STERNBERG: 13 THE COURT: 14 Whatever was already admitted remains admitted. 9 11 I have no There are not. So, Ms. Barksdale, if you could swear the witness. 15 ALYSSA WHITE, CUSTOMERS BANK'S WITNESS, SWORN 16 THE CLERK: 17 your last name for the record. 18 Please state your full name and spell THE WITNESS: 19 Alyssa Anne White, W-H-I-T-E. DIRECT EXAMINATION 20 BY MR. STERNBERG: 21 Q 22 Good afternoon, Ms. White. Could you briefly introduce yourself to the Court by 23 telling us where you work and what you do? 24 A 25 president of our digital operations. I work for Customers Bank. I am the senior vice I am responsible for Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 100 of 197 100 1 the governance and oversight of all of the FinTech partners 2 that we use for that product, as well as general 3 responsibility for the oversight of the portfolio itself. 4 Q 5 paycheck protection program loans? 6 A It does. 7 Q And if I call that PPP we will understand each other? 8 A Yes. 9 Q In the course of your work for Customers Bank on PPP 10 did you have occasion to work with Kabbage? 11 A I have. 12 Q Can you tell us, just in broad terms, about your work 13 with Kabbage? 14 A 15 week to discuss the status of the portfolio relative to 16 balances, other servicing activities that they perform on 17 behalf of Customers Bank for that portfolio. 18 Q 19 the last year or so, did you have occasion to have regular 20 interactions with Ms. Williams and Ms. Evans? 21 A Yes. 22 Q And how about before Ms. Evans arrived at Kabbage who 23 was your primary contact? 24 A Danny Eidson. 25 Q And Mr. Eidson was the CFO of Kabbage? Does your oversight responsibility extend to the I work with them. We meet typically several times a More recently, and what I mean by more recently is over Ms. Evans more so than Ms. Williams. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 101 of 197 101 1 A Correct. 2 Q Over the course of your work with Kabbage have you met 3 weekly, monthly with Kabbage team and the Customers Bank team 4 on a variety of issues? 5 A Yes. 6 Q Can you tell us what kinds of issues you interacted 7 with Kabbage on? 8 A 9 settlement, in October of 2022, we would meet on a weekly 10 basis to review reconciliation of the data that they provide. 11 We, obviously, rely heavily on the data that they provide for 12 our accounting and financial matters. 13 meet about discrepancies in the reporting information that 14 was provided. 15 Q What kinds of discrepancies? 16 A Borrower trial balances, where remittance payments 17 weren’t appropriately reflected on the borrower’s trial 18 balance, or the trial balance couldn’t be validated because 19 it appeared that there was a payment, but there was no 20 history in the remittance report. 21 of depend, really go hand in hand. 22 Q 23 team how did you find the accuracy and completeness of 24 Kabbage’s financial reporting? 25 A We would have regular meeting cadences. Prior to this So, we would often So, those two reports kind Based on your experience with working with the Kabbage Very poor data integrity. We just consistently Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 102 of 197 102 1 received information from Amex and then when KServicing was 2 developed after they sold to American Express then we 3 continued to get reporting from them that conflicted even 4 there were issues with reports they would send us an entirely 5 new report that didn’t reconcile to the other report. It was 6 just consistent errors across all the reporting. 7 Q 8 “trial balance.” 9 A 10 portfolio, the original amount that was disbursed in the 11 loan, and then the balance of that loan at a specific point 12 in time. 13 Q 14 important document in the banking lending industry? 15 A 16 accounting records. 17 publicly traded company that’s a critical document that 18 validates our financials as a bank and allows us to track the 19 funds that we have lent out to borrowers. 20 Q 21 Customers Bank? 22 A 23 the health of that portfolio, to be able to predict our 24 financials as a bank on our receivables. 25 delinquent on loans, just in general it’s a critical –- Ms. White, you’ve used this term a couple of times What is a trial balance? A trial balance itemizes all of the loans in the Why is a complete and accurate trial balance an It’s a financial –- its used for financial and From a regulatory standpoint and a Have you used trial balance in your daily work at Operational decisions are made to be able to monitor If borrowers are Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 103 of 197 103 1 Q Ms. White, are you aware of a settlement agreement 2 between Kabbage and Customers Bank? 3 A I am. 4 Q And you have seen the settlement agreement between the 5 parties? 6 A I have. 7 Q Were you involved in the reconciliation process that is 8 called for by that settlement agreement? 9 A I was. 10 Q What was your role in the reconciliation process? 11 A I helped coordinate it on behalf of Customers Bank and 12 interacted with Kabbage in gathering the information. 13 Q 14 Kabbage as part of the reconciliation process? 15 A 16 the amount that was held back, an accurate trial balance as 17 of the date of settlement, and the Synovus bank accounts. 18 Q 19 "remittance report of the amount held back." What information in particular did you request from We requested the remittance report that would reflect I probably should have done this already. You said, 20 Did you understand that one of the things being 21 reconciled was the amount of borrower payments that Kabbage 22 was holding and it had not yet paid to Customers Bank? 23 A Correct. 24 Q You mentioned you received the final remittance report, 25 a trial balance and Synovus bank statements? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 104 of 197 104 1 A That's what we requested. 2 Q Why do you want bank statements? 3 A We had -- because we had no visibility of borrower 4 payments. 5 a payment is by the reduction in the trial balance. 6 validate that the trial balance was accurate, that borrowers 7 had an inaccurate balance on their loan, and to validate that 8 the payments that were reflected in the remittance report 9 were accurate, we wanted some type of independent source to 10 be able to validate that remittance report was supported by 11 all of the funds that borrowers had deposited to and paid to 12 Kabbage. 13 Q And did you, indeed, get bank statements from Kabbage? 14 A We did. 15 Q Who sent them to you? 16 A Donna Evans. 17 Q Take a look, please, at the smaller binder that you've 18 got there, Tab 3, please, Exhibit 3. 19 A Okay. 20 Q Is Exhibit 3 an email that you received late in the day 21 on Friday, November 4th, from Donna Evans? 22 A Yes. 23 Q And what was contained, what was attached to Exhibit 3? 24 A There were three zip files containing the actual bank 25 statements, as well as a reconciliation that Kabbage had done The only way we could see that a borrower had made So, to Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 105 of 197 105 1 of those bank statements, which tied to the remittance 2 report. 3 Q 4 Exhibit 3 or anything that anyone from Kabbage told you, did 5 you understand that the information and data you were 6 receiving was preliminary in any way? 7 A No. 8 Q Did you understand that you were not to rely on it? 9 A No. 10 Q One of the attachments that's noted on Exhibit 3 is 11 something called "Synovus account analysis." 12 Do you see that? 13 A I do. 14 Q If you turn to what's Tab 4 in your binder of 15 Exhibit 22 in evidence in this matter, do you see something 16 called "KServicing-Synovus borrower repayment account 17 analysis"? 18 A I do. 19 Q Is that something that you received from Ms. Evans 20 attached to the email we were just looking at? 21 A Yes. 22 Q Toward the bottom of the page or middle of the page, it 23 says, "Per CUBI remittance file" and then there's some -- it 24 says, "borrower or repayments per remittance file" and then 25 there's a $26.6-odd-million number? Based on anything contained in the email that's Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 106 of 197 106 1 A Yes. 2 Q What did you understand that number to represent? 3 A The actual payments that borrowers made to Kabbage into 4 this bank account. 5 Q 6 had not been paid over yet to Customers Bank? 7 A Yes. 8 Q Did the remittance files, the Synovus bank remittance 9 files that Kabbage sent to Customers Bank, reflect borrower 10 payments of $26,608,962? 11 A Yes. 12 Q At the bottom of the page there's an entry called 13 "remaining variance to be resolved." 14 Did you understand that figure represented monies that Do you see that? 15 A I do. 16 Q Did you have an understanding of what that $497,900 17 number represented? 18 A 19 into the Synovus bank account and when they did the 20 reconciliation amongst their remittance report, they did not 21 have that reflected in the remittance report because they 22 couldn't, at that time, identify what loans they were 23 attributed to. 24 Q 25 were jointly engaged in with Kabbage was of the Synovus bank My understanding was that was money that was deposited Did you understand that the reconciliation that you Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 107 of 197 107 1 account? 2 A Yes. 3 MR. SLACK: Objection, Your Honor; leading. 4 THE COURT: Overruled. 5 I don't think that that question indicated the answer, so -- 6 MR. SLACK: I would just say he could ask that as, 7 What was your understanding, as opposed to, Did you 8 understand and have -- 9 THE COURT: 10 You can proceed. I've overruled the objection. 11 BY MR. STERNBERG: 12 Q 13 top of the page on Exhibit 22 that's Tab 4 in your small 14 binder? 15 A Synovus bank account. 16 Q During the reconciliation, did Kabbage provide you with 17 any reconciliation information about a Wells Fargo account? 18 A What account, what bank account is identified at the No. 19 MR. SLACK: Objection, Your Honor; leading. 20 THE COURT: What's your response? 21 MR. STERNBERG: 22 THE COURT: I can rephrase, Your Honor. Okay. 23 BY MR. STERNBERG: 24 Q 25 any, accounts, other than the Synovus account did Kabbage Ms. White, during the reconciliation process, what, if Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 108 of 197 108 1 provide you information on? 2 A They did not provide anything. 3 Q What do the two numbers at the bottom of Exhibit 22, 4 Tab 4 in your small binder, add up to? 5 A $27,106,862. 6 Q Take a look at Exhibit 1 in evidence, it's also Tab 1 7 in your binder. 8 million-dollar-and-change figure in the settlement account 9 reconciliation summary that you've prepared. 10 A 11 and the interest, as well as the 497,900 that we talked 12 about, so that added up to the 27 million. 13 total amount that they had represented had been deposited 14 into the Synovus bank account, which was, from my 15 understanding, the only account that they had used once they 16 stopped withholding funds from us to collect borrower 17 payments. 18 told us that they had withheld from us and with which we 19 verified, based on their information, was deposited into that 20 Synovus account. 21 Q 22 account -- the settlement reconciliation summary that you 23 prepared that's Exhibit 1 has two different figures for 24 borrower collections: 25 principal figure. Please tell us how you used that $27.1- In that second section, we took the principal amount That was the That amount represents the amount that they had We were looking at a figure of $26.608 million, but the there's an interest figure and a Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 109 of 197 109 1 A 2 principal and interest. 3 Q 4 top of the page, the first maybe two-thirds of it is under a 5 heading called "Per Synovus bank statement activity." 6 A Yes. 7 Q And then there's some calculations and entries there. 8 Yeah, the combination, the 26 was a combination of the Going back to Exhibit 22, Tab 4 in your binder, at the Do you see that? 9 A I do. 10 Q Did you or anyone on your team audit these entries? 11 A Other than the math that they did here, that was it. 12 Q In other words, you checked the math on the cover of 13 the page, but did you go to the actual entries to verify or 14 audit any of these entries? 15 A No. 16 Q Do you know any reason why a Synovus bank account 17 analysis would contain information from a separate bank 18 account at Wells Fargo? 19 A I do not. 20 Q Do you know why a Synovus bank account reconciliation 21 would include information that predated the opening of that 22 account? 23 A I do not. 24 Q Ms. White, you mentioned maybe five minutes ago that 25 you had regular meetings with the Kabbage team about various Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 110 of 197 110 1 discrepancies and loan balances and the borrower payments and 2 so on. 3 A Yes. 4 Q At one of the more recent meetings or one of the 5 meetings that was close in time to the bankruptcy petition, 6 approximately how many loans were there discrepant balances 7 on? 8 A 9 to all of this settlement analysis, there were 13,000 loans 10 that had reconciliation errors, which represented 11 $53 million. 12 balance than we had in our GL balance. 13 Q 14 discrepancies, what did you do assure yourself that the 15 reconciliation of the specific items called for by the 16 settlement agreement also made sense on a total-portfolio 17 basis? 18 A 19 total -- 20 Q 21 you. 22 A 23 reconciliations that we -- that I discussed that we would 24 typically do as part of our daily operations. 25 on a population of loans that were funded that were in the Our October month-end reconciliation, which was prior We're showing $53 million less on their trial So, based on your experience with these frequent It was pretty simple math. We had agreed on the Who's the "we" in that sentence? Sorry to interrupt "We," meaning Kabbage and Customers Bank, through the We had agreed Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 111 of 197 111 1 portfolio. 2 what had been disbursed, so that was our starting point. 3 What we were trying to do is kind of an independent 4 validation of the settlement amount to make sure that we were 5 accounting for all of the funds that Customers Bank had 6 disbursed to borrowers was. 7 So, we knew the loans, loan-by-loan. We knew We looked at all the funds that we had received through 8 the SBA and from Kabbage, prior to them holding funds back, 9 which got us to our outstanding balance within the portfolio, 10 compared that to their trial balance, which they provided to 11 us as part of the settlement. 12 should be the amount of the holdbacks. 13 The difference between those So, basically, we were saying, we show this much money 14 outstanding in the portfolio. You're reporting to us that 15 you see this money. 16 showing a lower balance because they've been collected 17 remittances from the borrower that hadn't been provided to 18 us, and that should help us back into the amount of 19 remittance that they were holding. You're seeing that they should be 20 So, we did that type of an analysis to validate the 21 information and then we looked at the inverse of it and said, 22 Well, if we looked at the trial balance that they're 23 recording -- 24 Q "They" being Kabbage? 25 A "They" being Kabbage, and we just plugged in the amount Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 112 of 197 112 1 that they told us that they owed us, would we get to the 2 same -- once we applied those payments, will our trial 3 balance or our GL match with what they're reporting? 4 And we were able to, in both scenarios, reconcile 5 within $1300. 6 account, all of that reconciliation, that supported all of 7 the funds, that analysis to be able to account for our entire 8 portfolio, we felt that that was a fair assessment and 9 independent assessment to validate. 10 Q 11 the analysis that you just described? 12 A Yes. 13 Q Is that document Tab 13 in your binder? 14 A It is. 15 Q Is Tab 13 an analysis that -- 16 A Yes. 17 Q -- you prepared as you just described? 18 A Yes. 19 20 So, we felt that was, in addition to the bank Ms. White, did you prepare a document that summarized MR. STERNBERG: Your Honor, subject to the protocols that you identified, I'll offer Exhibit 13. 21 THE COURT: Okay. So, I'm going to let you 22 examine the witness about this and I'll reserve judgment 23 about its admissibility when we get to the end. 24 BY MR. STERNBERG: 25 Q So, what does it mean, Ms. White, for the analysis that Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 113 of 197 113 1 you just described and that you also depicted in Exhibit 13, 2 to get within 1300 or so dollars on a total-portfolio basis? 3 A 4 loan level, but at the aggregate level, starting from the 5 top, Customers Bank disbursed $2.5 billion of funds. 6 the funds that had been returned to us, we were showing an 7 outstanding balance of $202 million. 8 showing as should be the outstanding balance, which should, 9 in theory, equal the trial balance that Kabbage was 10 responsible for maintaining on our behalf. 11 It means that at the aggregate level, not a loan-by- Less That is what we were Because of this holdback, we obviously have this 12 discrepancy. 13 amounts that in scenario one that Kabbage had provided to us 14 as part of settlement of what they were saying they had been 15 holding back to us -- 16 Q 17 So, in the middle section are all of the I'm just going to pause you there for a moment. You have six or eight entries that say, "KS provided." 18 What does that mean? 19 A 20 Kabbage during settlement to calculate the settlement 21 payment. 22 Q 23 November 4th -- 24 A Yes. 25 Q -- Friday, November 4th, correct? That means those are the reports that we received from You got a series of emails from Donna Evans on Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 114 of 197 114 1 A Yes. 2 Q And you identified them by number here, Number 2, 3 Number 5, Number 4, et cetera. 4 A 5 sent, or Ms. Evans had sent the material. 6 Q 7 "KServicing Update #3." 8 A Correct, yeah. 9 Q So, you're at -- the numbers correspond to the subject 10 line of different emails you got from Donna Evans on 11 November 4th, 2022? 12 A Correct. 13 Q What would happen to this trial-balance analysis if 14 Customers Bank had to pay an additional $1.5 million to 15 Kabbage? 16 A 17 loans. 18 Q What do you mean? 19 A So, if you reduce -- that would be, basically, saying 20 you'd be reducing that $28.1 million total. 21 We didn't really owe you that; we owed you one and a half 22 million less. 23 doesn't work, but it would tell me that they're missing a 24 million and a half of our funds that we had disbursed that 25 they were responsible for tracking. That corresponds to the email subject that Donna had Just as an example, if we look at Exhibit 3, it says It would mean there's $1.5 million missing on other They're saying, If you take that out, now this reconciliation Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 115 of 197 115 1 So, just looking at five loans out of the 98,000 loan 2 portfolio would not be an accurate analysis. You need to 3 look at the entire -- you either need to look at all 98,000 4 loans to understand where the gives-and-takes, or you need to 5 look at it at the aggregate level. 6 Q And you looked at it at the aggregate level? 7 A Correct. 8 Q Are you aware of whether anyone at Kabbage looked at it 9 either at the 98,000-loan level or at the aggregate level? 10 A I don't believe that happened. 11 Q I want to make sure I understand one of the figures in 12 Exhibit 13. 13 received" there's a figure of $25,578,634 -- let me say that 14 again -- $25,578,634. 15 Do you see that? Next to the words "remittance collected/not 16 A Yes. 17 Q Why have you used that figure and not the 26.6 million? 18 A This analysis is strictly on principal. 19 track interest. 20 at the interest level. 21 possibly can, we wanted to just look strictly at a pure- 22 principal analysis. 23 Q 24 from about a week ago? 25 A We did not We relied solely on what Kabbage calculated So, just to be as clean as we Have you had a chance to review Ms. Evans' declaration I have. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 116 of 197 116 1 Q 2 American Express trial balance as the basis for your work 3 that's depicted in Exhibit 13. 4 A 5 and it's indicated here, the KS loan trial 10/3/2022. 6 various conversations with KServicing during the settlement, 7 and when we had asked for an accurate trial balance, because 8 we knew of these errors. 9 had discussions around how can we get to the point where we 10 have an accurate trial balance that we can use to get to 11 closure on the settlement? 12 In it there's a suggestion that you used a faulty I did not. Can you address that. The trial balance that we used was provided We had They were aware of the errors. We They had suggested they wanted to create a new trial 13 balance that came directly from KServicing, using their data. 14 They felt their data was more accurate, so they provided that 15 report specifically for this analysis. 16 adjustments that needed to be made to that trial. 17 weren't able to apply guaranty payments, which would have 18 overstated the trial balance that we were aware of, so we 19 made those adjustments once they sent that report to us. 20 There were They And we did another validation where we could see they 21 didn't apply forgiveness payments or other payments that 22 would have come from the SBA 23 we did that validation and applied those and that's indicated 24 in the footnote that's on this document. 25 did not use the Amex trial balance. at the loan-level detail, so But this document Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 117 of 197 117 1 Q Ms. White, during the reconciliation period, did anyone 2 from KServicing explain anything to you about its position 3 that there were five loans totaling $1.5 million that had 4 been paid in October of 2020 that were in this notice account 5 analysis? 6 A No. 7 Q Did anyone from KServicing ever present you or any one 8 of your colleagues with an assertion of what the settlement 9 payment should have been from Kabbage's perspective? 10 A No, they only provided the documents. 11 Q To this day, has KServicing presented to Customers Bank 12 its view of how the settlement payment meshes with the total 13 trial-balance analysis? 14 A No. 15 Q Why can't you look at five loans out of a portfolio of 16 99,000 or so and conclude that if there was a payment on 17 those five loans in October 2020 and it shows up on a Synovus 18 account reconciliation that Customers Bank has been paid 19 twice? 20 A 21 reconciliations that I talked about earlier. 22 there were errors at the loan level of 13 -- of over 13,000 23 loans that equated to $53 million and at the net, $53 million 24 that indicated they had collected, but didn't pay to us. 25 Now, there were -- that was attributable to various root Well, I mean, it kind of goes back to the monthly I mean, we knew Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 118 of 197 118 1 2 causes, but the aggregate level showed $53 million. Now, if you're going to say, Well, you owe us 1.5, 3 well, then, there's going to be, I know of ones, I mean, we 4 experienced them all the time, ones where there would be 5 amounts that are due to us in the inverse. 6 all nets out, you either got to do all 98,000 loans and 7 figure out what are the gives-and-takes, or you've got to do 8 it at the aggregate level. 9 like, five loans that were, you know, to your advantage. 10 That just wouldn't be an accurate assessment. 11 MR. STERNBERG: 12 THE COURT: 13 16 You can't just take a small, Your Honor, may I have a moment? You may. (Pause) 14 15 So, where that MR. STERNBERG: That's all the questions I had, Your Honor. THE COURT: Okay. Mr. Slack, you would like to go 17 into cross or is this a sensible time to break for lunch? 18 Whatever the parties' reference is, in that regard. 19 20 21 22 MR. SLACK: This is probably a sensible time to break for lunch. THE COURT: Okay. How long would folks like? It's about 12:30. 23 UNIDENTIFIED SPEAKER: 24 MR. SLACK: 25 UNIDENTIFIED SPEAKER: 45 minutes. What's that? 45 minutes. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 119 of 197 119 1 MR. SLACK: Yeah, 45 minutes. 2 THE COURT: Okay. So, we'll come back at, say, 3 1:20; is that agreeable on your side? 4 MR. STERNBERG: It is, Your Honor. We're just as 5 happy to press forward, but if that's the desire of the 6 group -- 7 MR. SLACK: And, Your Honor, I just want to make 8 sure that everybody is aware that the rule is still in 9 effect. 10 THE COURT: So, Ms. White, you remain on the 11 stand, so you shouldn't discuss your testimony with anyone 12 during lunch. 13 THE WITNESS: Yes, understood. 14 THE COURT: 15 satisfy your concern? 16 MR. SLACK: It does, indeed. 17 THE COURT: Okay. 18 45 minutes and come back at 1:20. 19 recess. Mr. Slack, does that admonition Thank you. So, we will break. We'll take With that, we're in Thank you. 20 (Recess taken at 12:35 p.m.) 21 (Proceedings resumed at 1:26 p.m.) 22 THE COURT: 23 I want to start off by apologizing for running 24 behind. 25 sorry about that. Be seated. I try to make a point of actually being on time, so I just -- I wish I had a better excuse; I Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 120 of 197 120 1 just started working on something else and lost track of 2 time. 3 your patience. So, I wish I had a better excuse, but thank you for 4 5 And, Mr. Slack, I guess we should recall the witness to the stand. 6 ALYSSA WHITE, CUSTOMERS BANK'S WITNESS, PREVIOUSLY SWORN, 7 RESUMES STAND 8 THE COURT: 9 And, Mr. Slack, you can proceed. 10 Okay. And you remain under oath. CROSS-EXAMINATION 11 BY MR. SLACK: 12 Q 13 Gotshal and I'm going to ask you a couple questions. 14 Ms. White, my name is Richard Slack. I'm from Weil So, on your direct testimony, you indicated that you're 15 familiar with the settlement agreement, correct? 16 A Correct. 17 Q And you understand that the settlement agreement 18 defines the settlement payment as the settlement amount of 19 58 million, less the amount of what's referred to as the 20 disputed KServicing holdbacks as of the petition date, right? 21 A Correct. 22 Q And the disputed KServicing holdbacks is the sum of two 23 things: 24 disputed KServicing remittance holdback, correct? 25 A one, the disputed KServicing fee holdback and the Yes, I think there was a third portion of canceled or Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 121 of 197 121 1 returned loans. 2 Q Excuse me? 3 A I think there was a third portion of canceled or 4 returned loans, as well. 5 Q 6 to the fee holdback, correct? 7 eight million three hundred and seventeen amount of the fee 8 holdback, correct? 9 A Oh, in the settlement, yes. 10 Q Yeah, in the settlement, that's right. 11 And the point, though, is that the parties have agreed The parties agreed to the And so the only holdback category in dispute is the 12 disputed KServicing remittance holdback amount, right? 13 A That's correct. 14 Q Now, borrower remittances, and I know you talked about 15 this on your direct, are the funds collected from borrowers 16 that KServicing is required to remit to Customers Bank under 17 the parties' prepetition agreements, correct? 18 A Correct. 19 Q And so, the idea is that if KServicing collected money 20 that it has already paid to Customers Bank, it shouldn't be 21 on the remittance list, correct? 22 A 23 responsible for the entire trial balance of loans, and so if 24 money is collected at an aggregate level, they're responsible 25 for that, that whole balance, so accounting for it and then Well, it depends on what you say, because KServicing is Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 122 of 197 122 1 returning those funds to us. 2 Q 3 So, let's try to take it on a granular level. Certainly, the remittance list is a loan-by-loan list, 4 correct? There's a remittance file that's a loan-by-loan 5 file, correct? 6 A It's a transaction. 7 Q And that -- 8 A And there could be multiple line items for loans and 9 it's like a -- it's not a comprehensive list. 10 the time and the scope that it's created. 11 Q 12 maybe that'll help us here. 13 Exhibit 1, can you look at that. 14 A Yep. 15 Q And this sets forth Customers Bank's calculation of the 16 settlement amount that have paid, correct? 17 A Yes. 18 Q And it sets forth the methodology that it used in 19 calculating the settlement payment, correct? 20 A 21 bit, I don't know that we set the methodology; the 22 methodology was per the settlement agreement. 23 Q I'm sorry, the -- 24 A You said we set forth the methodology that we used, but 25 we didn't define the methodology. It's a transaction-based list. It depends on And so what -- let's take a look at your calculation, So, your calculation, which is Yeah, the only thing I would just maybe tweak a little We went according to the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 123 of 197 123 1 settlement. 2 Q 3 section that's labeled "total borrower remittance payments"; 4 do you see that? 5 A Yep. 6 Q And that's 27,106,862, correct? 7 A Correct. 8 Q And Customers Bank broke that up into three different 9 figures, correct? 10 A Correct. 11 Q And the first one of those is the borrower principal 12 payments and returns; do you see that? 13 A I do. 14 Q And Customers Bank's specifically said that was per the 15 remittance file, correct? 16 A Correct. 17 Q And the next one was interest collected; do you see 18 that? 19 A I do. 20 Q And even though it doesn't say it, isn't it a fact that 21 the interest collected was also taken directly from the 22 remittance file? 23 A Yes. 24 Q And then the third is the reported remittance account 25 variance, correct? Okay. And so, for example, in your sheet, there's a Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 124 of 197 124 1 A From the Synovus accountant analysis, yes. 2 Q Now, Customers Bank still stands by this calculation, 3 correct? 4 A 5 Synovus bank account. 6 was represented in the remittance report, but the total 7 amount was validated with the Synovus bank statements and the 8 reconciliation report that was provided by KServicing. 9 Q 10 correct? 11 A It is, yes. 12 Q As set forth in that sheet, correct? 13 A In what sheet? 14 Q Exhibit 1 to -- Exhibit 1? 15 A Oh, Exhibit 1, yes. 16 Q And, in fact, the numbers in Exhibit 1 do not come from 17 a trial-balance analysis, correct? 18 A They -- 19 Q The actual numbers do not come there a trial-balance 20 analysis, correct? 21 A 22 reconciliation. 23 Q 24 borrower principal repayment and returns came from the 25 remittance file, correct? Yes, because we were able to reconcile it to the So this amount was, a portion of it But the answer is yes, this is still your calculation, They came from the Synovus bank account analysis Well, they came from where they said; for example, the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 125 of 197 125 1 A Which was in, also in the Synovus bank account 2 analysis. 3 Q 4 and returns and the interest collected without looking at the 5 remittance file? 6 A With the Synovus bank account statements, yes. 7 Q And did you, in fact, do that? 8 remittance file to get that or did you look at the Synovus 9 bank account files to get that? 10 A 11 account because we had no way to validate the information 12 that was provided in the remittance report and had concerns 13 with the data integrity, so we really used the Synovus bank 14 reconciliation account. 15 Q 16 well, let's do this. 17 borrower account, which is Exhibit 22. 18 A Is that Exhibit 3 or 4? 19 Q And it has all three tabs in it. Could you determine the borrower principal repayment Did you look at the We were at -- we relied mostly on the Synovus bank So, can you tell me how you went about taking the -Let's take a look at the Synovus 20 Can you take the Court through however you need to, to 21 show how you calculated the borrower principal repayments and 22 returns and the interest collected numbers in your settlement 23 calculation from that sheet. 24 A 25 should be looking at? Can you just tell me where you're looking -- where I Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 126 of 197 126 1 Q All right. So, Exhibit 22, that's the Synovus account 2 analysis, right? 3 A I don't have an Exhibit 22. 4 Q Do you have -- 5 A Is it in here? 6 Q It's in the big binder, not the small binder. 7 talking about the KServicing exhibits. 8 A Okay. 9 Q All right. 10 A I do. 11 Q You've seen Exhibit 22 before, correct? 12 A I have. 13 Q That is the Synovus account analysis that you were 14 referring to, correct? 15 A Correct. 16 Q So, can you walk the Court through, in whatever way you 17 need to, to show the Court how you calculated the 25,578,633 18 borrower principal repayment and returns from that 19 spreadsheet? 20 A 21 Exhibit 22, ties to the, under Exhibit 1, the total borrower 22 remittance payments P&I, twenty-seven one oh six eight sixty- 23 two. 24 Q I'm sorry, tell me, again, where you're looking. 25 A On Exhibit 22 -- I'm now Do you have Exhibit 22? So, the twenty-seven one oh six, which is Row 15 on Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 127 of 197 127 1 Q Yes. 2 A -- Row 15, you'll see twenty-seven one oh six eight 3 sixty-two -- 4 Q Yes. 5 A -- so, that's the total amount of the Synovus bank 6 account -- 7 Q Right. 8 A -- reconciliation of payments that have been collected. 9 Q Right. 10 A And then that was used on Exhibit 1, where it says, 11 total borrower remittance payments P&I, twenty-seven one oh 12 six eight sixty-two. 13 Q 14 different question. 15 how you would calculate the actual borrower repayment number, 16 which is 25,578,633 from that spreadsheet. 17 A 18 out the four-ninety seven nine hundred that's used in 19 Exhibit 1, reported remittance account variance four-ninety 20 seven nine hundred. 21 Q Yes. 22 A And then the twenty-five five seventy eight six thirty- 23 three and the 1,030,328 was a breakdown of the P&I that came 24 from the remittance report, but it all tied back to the 25 twenty-seven one oh six. Right. So, I do -- I get that number, but I asked a I asked the question, can you show me So, the four-ninety -- so, on Exhibit 2, Row 20 less So, it all is -- it's all Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 128 of 197 128 1 reconciled to the Synovus bank account. 2 Q 3 pointed out that you said, per the remittance file, the 4 twenty-five five seventy eight six thirty-three came from the 5 remittance file, not from the Synovus account, correct? 6 A 7 bank account. 8 bank account and then that gets itemized. Right. So, the point is that the two numbers that I It came, well, I mean it all starts with the Synovus A borrower makes one payment into the Synovus 9 MR. SLACK: Your Honor, I just wish I could get an 10 answer to my question. I'm, you know, not really getting an 11 answer, yes or no, to my question. 12 witness needs to explain this, counsel can -- her counsel can 13 cross or redirect. 14 MR. STERNBERG: And, obviously, if the Your Honor, my sense is Ms. White 15 is answering the question; perhaps, not in a way Mr. Slack 16 wants to hear it. 17 giving a response. She's engaging with his question and 18 THE COURT: So, I don't think it's nonresponsive. 19 I'll let you continue cross -- 20 MR. SLACK: Okay. 21 THE COURT: -- and we'll see where we go. 22 BY MR. SLACK: 23 Q 24 could only be derived from the remittance file, correct? 25 A So, the twenty-five five seventy eight six thirty-three Yes. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 129 of 197 129 1 Q 2 calculated from the remittance file, correct? 3 A Yes. 4 Q Okay. 5 Exhibit 8. 6 summary document of the five loans that KServicing contends 7 had payments made by borrowers, but that the money was 8 already paid back to Customers Bank. 9 And the interest collected, the 1,030,328 could only be Now, I'd like you to take a look at Debtors' It's also in the big binder. And this is a Do you recognize those loans as the five loans that are 10 at issue? 11 A 12 Exhibit 8? 13 Q It's Exhibit 8 in the big binder. 14 A Yeah, I'm seeing an email. 15 Q There's a tab that says Exhibit 8. 16 that just say 1 through 8, but there's Exhibit 8. 17 A Yeah, I'm on Exhibit 8 is a -- oh, wait. 18 Q It should be a one-page exhibit. 19 A It's an email from November 14th from Donna Evans. 20 Q I'm sorry, just the one that's the number 8? 21 A Oh, just the number 8, okay. 22 shows me Exhibit 5. 23 Q I see. 24 A Okay. 25 Q I thought I had this -- I must be looking at the wrong thing. You said I'm seeing an email. There's some tabs Yeah -- When I go to Tab 8, it Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 130 of 197 130 1 A I see it. 2 3 I think I'm on the right page. UNIDENTIFIED SPEAKER: A lot of numbers are on the top. 4 THE WITNESS: Okay. 5 BY MR. SLACK: 6 Q 7 five loans? 8 A Yep. 9 Q Do you recognize these as the five loans that are at 10 issue in this hearing? 11 A I suppose. 12 Q Well, I'm just asking whether you recognize those. 13 mean, after you got -- received KServicing's papers, did you 14 look at the five loans that KServicing had said had payments 15 that had been made by borrowers and then KServicing had 16 already paid to CUBI? 17 A 18 identified. 19 Q 20 issue? 21 A I don't recognize -- I mean, I don't recognize them. 22 Q Okay. 23 A I mean, I guess when you say "recognize" as -- 24 Q Well, so, let me ask it -- 25 A -- I'm not familiar with them. All right. Do we have it now, the one page with the In Tamica Williams' declaration, she had four loans So, do you recognize these as the loans that are at I Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 131 of 197 131 1 Q Let me ask it a different way. 2 Putting aside whatever loans they are, after you 3 received KServicing's papers, with respect to the loans that 4 are at issue, did you go back and look to see whether, in 5 fact, they were on the remittance file? 6 A Did I? 7 Q So, you did not go and look to see whether they were on 8 the remittance file? 9 A 10 them. 11 Q 12 No. I found four of them, I believe. I could not find of So you found four of them. Didn't one of them have two payments? 13 A That may be the case. 14 Q Okay. 15 A I didn't -- 16 Q And did you also go to look to see whether -- and you 17 don't deny as you sit here today, that those loans, in fact, 18 were on the remittance file, correct? 19 A I can't say whether they were or not. 20 Q I'm sorry, what? 21 A I can't say whether they were or not. 22 Q So, did you go back and actually -- you have the 23 remittance file, right? 24 A I do. 25 Q And so, did you go back and check to see whether they I cannot. You have the remittance file? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 132 of 197 132 1 were on the remittance file? 2 A 3 could find those on the Synovus bank account trial 4 reconciliation, but I did not look at the remittance report, 5 no. 6 Q 7 loans had payments that were made to CUBI? 8 A I did not. 9 Q Did anyone at Customers Bank, to your knowledge, go and 10 look to see whether those loans were on the remittance file? 11 A Not to my knowledge. 12 Q So, you can't, as you sit here today, you don't deny 13 that those loans were actually on the remittance file, 14 correct? 15 A I cannot say whether they were or weren't. 16 Q And to your knowledge, nobody at Customers Bank has 17 gone to look to see whether they're on the remittance file? 18 A 19 As I said before, looking at only five loans amongst 98,000 20 was not a relevant data point. 21 Q 22 knowledge, went to go look and see whether those loans that 23 had money paid with respect to them, correct? 24 A I did not, not that I recall, that I am familiar with. 25 Q Now, if you -- now, earlier you, in your testimony, you I looked at the four that were in Ms. Williams'. Okay. I Did you go back to look and see whether those No, because it was not a relevant piece of information. And you didn't -- and nobody at Customers Bank, to your Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 133 of 197 133 1 had said that the remittance report that you received was 2 somehow related to the Synovus bank account. 3 Do you recall, generally, that testimony? 4 A Yes. 5 Q As you sit here today, is it your testimony that all of 6 the loans that were contained in the remittance file were 7 from transactions that were made in the Synovus bank account? 8 A That's my understanding. 9 Q Okay. 10 remittance file from Ms. Evans, correct? 11 A Yes. 12 Q And that was on November 4th, correct? 13 A Yes. 14 Q All right. 15 Well, let's take a look. You received the So, let's take a look at -- MR. SLACK: Your Honor, what I'd like to do 16 because I think it's easier is to use a native file so that I 17 can actually have any colleague just highlight some -- 18 THE COURT: You may. 19 MR. SLACK: Thank you. 20 THE COURT: So, how do you propose to display it? 21 MR. SLACK: Well, what I was told is that we are 22 23 24 25 going to do it by Zoom. THE COURT: Perfect. Okay. And you'll share your screen -- your colleague will share their screen and -MR. SLACK: Exactly. And hopefully, we'll have Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 134 of 197 134 1 some coordination where this will work. 2 THE COURT: Okay. 3 MR. SLACK: I do need my glasses for this. 4 BY MR. SLACK: 5 Q 6 the remittance file. So, let's take a look at some of the loans that are on 7 8 The first thing -- MR. STERNBERG: What number of exhibit are we looking at? 9 MR. SLACK: Yes. So, I am looking at KServicing's 10 Exhibit -- 28 is the native and the non-native is 22 -- 11 not 22 -- 23. 12 BY MR. SLACK: 13 Q 14 you said, a transaction-by-transaction analysis, correct? 15 A 16 month-to-month on what we get. 17 just showed what they owed us or if it had -- I believe it 18 did include everything that was returned. 19 Q 20 transaction analysis, correct? 21 A 22 across the portfolio. 23 Q 24 document before, correct? 25 A And you'd agree with me that the remittance file is, as Yes. Not necessarily comprehensive -- it changes I can't recall if this file I just asked for a moment, it is a transaction-by- Yes, but just to clarify, not every single transaction And you've seen -- you, again, you've seen this I have. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 135 of 197 135 1 Q 2 five is SBA 3 18411. 4 And if you look down, the first loan on the list of loan ID 8634997301 and we see that in Row We'll get that in a second. Do you see that loan there? 5 A I do. 6 Q And what is your understanding of the Column I, which 7 has post time? 8 A 9 we've had outstanding. 10 reporting that they've provided to us. 11 Q 12 correct? 13 A 14 again, I don't know what that post time means, because if you 15 look at it across the entire remittance report, you'll see 16 post times for returns that happened months later. 17 you'll see current transactions with a post time from the 18 original amount. 19 Q 20 time predates the beginning of the Synovus account, correct? 21 A 22 necessarily mean that that was a payment made on 9/18/2020. 23 Q 24 had a post time prior to the Synovus account, correct? 25 A I don't know. That's been one of the questions that It's not consistently used in the But this shows that this was posted on 9/18/2020, Yes, and there's a lot -- but I mean those dates -- So, But we can agree, at least right now, that that post Yeah, but I don't know what it means. It doesn't But whatever it means, somebody wrote that this was -- Somebody wrote that, but that is not a reliable data Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 136 of 197 136 1 point. 2 Q 3 hearing, correct? 4 A 5 column that says "status"; it'll say "owed" and "returned." 6 And if you filter on that, you can see all of the post times, 7 that it doesn't necessarily -- is not an indicator that -- 8 what account it came from. 9 Q 10 I asked whether this loan was one of the loans that's at 11 issue in this hearing? 12 A It is on this list. 13 Q Okay. 14 Customers Bank used when it said, "per remittance file," 15 correct? 16 A Yes. 17 Q Okay. 18 other loans that they would also be in the remittance file? 19 A I suspect you've checked it. 20 Q Have you taken a look at Ms. Williams' declaration, the 21 second declaration? 22 A I have. 23 Q And Ms. Williams' declaration talks about how these 24 loans are in the remittance file, correct? 25 A And that is one of the loans that's at issue in this If you filter -- if you go to the right, there's a All right. What I asked was slightly different. And it's showing in the remittance file that And do you have any doubt that if we went to the How they are, did you say that? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 137 of 197 137 1 Q That the loans that are at issue today -- 2 A Yes. 3 Q -- are in the remittance file, correct? 4 A Yes, that's my recollection. 5 Q And as you sit here today, you don't have any 6 information that would say that those loans are not in the 7 remittance file, correct? 8 A Correct. 9 Q Okay. 10 the summary page to the Synovus spreadsheet, which is 11 Exhibit 22. 12 Now, I'd also like you to take a look at, again, Do you see that? 13 A I do. 14 Q Now, do you have that first summary page of Exhibit 22 15 in front of you? 16 A I do. 17 Q And the first part that you're counsel asked you about 18 was the per-Synovus bank statement activity. 19 Do you see that? 20 A I do. 21 Q And all the per-Synovus bank statement activity, and 22 there's a number of columns, that has a subtotal of 23 25,438,210, correct? 24 A I see that. 25 Q And then there's a column that says, "researched items Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 138 of 197 138 1 resolved." 2 Do you see that? 3 A I do. 4 Q What was your understanding of what "researched items 5 resolved" meant? 6 A I have no idea. 7 Q But you'd agree with me that the research items 8 resolved was added to the Synovus bank statement activity to 9 get to the 27,107,862, correct? 10 A It is a line item added, yes. 11 Q And you had to add, in other words, you took the 12 Synovus account activity and then there was an addition of 13 the money million six eight six five one that was the 14 research items resolved, correct? 15 A I did not, no. 16 Q But you see that that was there, correct? 17 A I can see it, but just to be clear, I didn't do this; 18 this was done by KServicing and presented as a reconciliation 19 of Synovus account. 20 Q 21 then took into your analysis was the 27,107,862, correct? 22 A Yes, it validated the Synovus account. 23 Q So, I'll ask it slightly different. 24 25 This was -- Well, maybe it's better said that the number that you That was comprised of the subtotal of the Synovus bank account plus the researched items resolved, correct? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 139 of 197 139 1 A 2 Synovus account. 3 representation of all of the money that was in the Synovus 4 bank account. 5 can't say whether it was, because I didn't do this, so I 6 can't -- I couldn't accurately say that. 7 Q 8 I'll try again, because maybe I'm not being clear. 9 I don't know what those researched items were in the My understanding was this is a I don't know where that 1668 came from. I'm asking just a slightly different question. I So, You used, did you not, in your calculation, the 10 27,106,862 number, correct? 11 A We did. 12 Q And that was comprised of the twenty-five four three 13 eight two ten plus this one six six eight six five one as a 14 mathematical matter, correct? 15 A As a mathematical; yes, that's accurate. 16 Q And so in order to get to the 27,106,862 number, you 17 had to add this researched items resolved column as a matter 18 of math, correct? 19 A That is what was presented, yes. 20 Q Okay. 21 comprised the researched items resolved? 22 A 23 have. 24 Q Have you looked at the workbook -- 25 A Yes. And have you ever gone and looked at what You mean within the workbook that was presented? I Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 140 of 197 140 1 Q 2 resolved? 3 A I have. 4 Q Okay. 5 A Maybe a week or two ago. 6 Q Okay. 7 papers, its reply papers, correct, and after KServicing had 8 filed this motion, correct? 9 A I believe so. 10 Q And you were aware, were you not, of the five loans or 11 the four loans with two payments that KServicing contends 12 were already paid to Customers Bank, correct? 13 A You said that they contend that? 14 Q That's what I said. 15 A Yes, that's accurate. 16 Q That's for the judge to decide. 17 -- at the items that comprise the researched items And when's the last time you did that? And that was after KServicing had filed its The -- so, let's take a look at, in Exhibit 22, let's 18 take a look at the last tab. 19 off the Customers Bank exhibit and is on our exhibit. 20 This is the tab that was left And if you take a look at the items there, there's a 21 handful of items that are listed there. Do you see those? 22 A I do. 23 Q Isn't it true that the two biggest loans that are on 24 this list are two of the loans that KServicing contends were 25 already paid to Customers Bank, correct? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 141 of 197 141 1 A I would have to do a comparison of those. 2 Q All right. 3 A Okay. 4 Q Let's, in particular, you know, whatever's easiest for 5 you. It may be for you to go to that Exhibit 8 which has the 6 summary of those and looking at the loan ID and the amounts. 7 So, for example, if you take a look at the loan that's Well, let's do that. 8 a million two, five five one seven five, that's ID number 9 8634997301, correct? 10 A 11 I see it. 12 Q You can see it, right? 13 A Yes, I see it. 14 Q And take a look two down, the loan that has the ID 15 9351437302, that also is a loan that KServicing has now said 16 was actually paid back to Customers Bank, correct? 17 A I see that, yes. 18 Q So, you would agree with me, would you not, that if 19 those, just as a matter of math, if those loans were actually 20 paid back to Customers Bank and you reduced, as a result, the 21 1668651 by those two loans, that would be approximately, just 22 those two loans alone, would be a decrease in the Synovus 23 bank statement activity on the summary page of about 24 1.5 million, correct? 25 A I see on Exhibit 22, the 1.255 is on the -- yes. Yes, So, you're saying those weren't part of the Synovus Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 142 of 197 142 1 reconciliation? 2 I'm sorry, I'm not following. Can you just repeat that. 3 Q Well, we'll try this again. In other words, the 4 27,106,862, correct, was a number that you used in the 5 calculation of the settlement payment, correct? 6 A Yes, per the -- 7 Q And as a matter of math, it included the Synovus 8 activity, plus this 1668651, correct? 9 A Yes. 10 Q And we just looked at that 16768651 is, in part, 11 comprised of two loans that are at issue today of 12 approximately $1.5 million, correct? 13 A Correct. 14 Q And so if those items were, in fact, improperly 15 reviewed as being resolved at that time, when, in fact, 16 they'd been paid to Customers Bank, this number, the 17 27,106,862 would be a million and a half less, correct? 18 A Correct. 19 Q Now, Ms. White, on October -- on November 14th, 20 Customers Bank paid KServicing a settlement payment of 21 approximately 19.47 million, correct? 22 A Yes. 23 Q And you agree that that 19.47 million number was in 24 error, correct? 25 A I think you're referring to the interest that was later Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 143 of 197 143 1 added on. 2 Q What I'm saying is that number was incorrect, right? 3 A I'd have to go back and look at the (indiscernible). 4 The only reason that it would be what the exact amount was, 5 we later came back and added on interest, so I think that's 6 what you're referring to. 7 Q 8 correct? 9 A Later on for the interest. 10 Q So the initial number was wrong, correct? 11 A It was only principal, so we only factored in 12 principal. 13 added in. 14 Q 15 number? 16 A Of principal, yes. 17 Q Was it the total correct number? 18 A It was the correct number of principal and then we 19 later on added the interest. 20 Q 21 correct number. 22 A 23 and we later on added -- 24 Q But I get to ask the questions. 25 A -- in interest. Customers Bank paid a million thirty thousand more, We realized later that interest needed to be Was the 19.47 million number that was paid the correct So, it's your view that the 19.47 payment was the That's at final, that's the correct number? No, I think I said it was the correct principal amount Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 144 of 197 144 1 Because you're framing it as incorrect and I don't 2 think it was incorrect. 3 Q Okay. 4 A I think we later on realized that we didn't include 5 interest. 6 Q 7 payment was you had double-counted the interest, correct? 8 A 9 that detail. 10 interest and when we realized that error, we made a payment 11 later for that interest error. 12 MR. SLACK: 13 Well, in fact, what you had done in your initial I would have to go back. I really don't recall all I do know that we initially did not include Can I -- I have an exhibit. It's not on the exhibit list, but may I approach, Your Honor? 14 THE COURT: 15 Thank you. 16 THE WITNESS: You may. Thank you. 17 BY MR. SLACK: 18 Q Ms. White, do you recognize this email? 19 A Yes. 20 Q And this is an email sent by Mr. Sachs to KServicing on 21 November 14th? 22 A Yes. 23 Q And if you look at the calculation of the settlement 24 payment on page 2, do you see that? 25 A I do. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 145 of 197 145 1 Q It has a calculation of 19.4, correct? 2 A Yes. 3 Q And that calculation was wrong, correct? 4 A That was accurate, but there was a missing interest 5 amount that we later paid. 6 Q 7 it has an interest amount, right, if you look at interest 8 collected, the 1030328? 9 A Yes. 10 Q That interest number is correct, isn't it? 11 A But that's on the interest, yes. 12 Q And what happened was the borrower principal repayments 13 returns, per the remittance file, of 26,608,962, that number 14 is incorrect, correct? 15 A 16 interest, yes. 17 Q 18 for the borrower principal repayments and returns per the 19 remittance file, correct? 20 MR. STERNBERG: Well, let's try this. So, if you take a look at the -- I'm sorry, you're right; it double-counted the I knew it had something to do with interest. Now, ultimately, Customers Bank used the correct number Your Honor, at this point, I 21 object. We've been through this a number of times and it's 22 wholly irrelevant to anything that's in dispute right now. 23 THE COURT: Mr. Slack? 24 MR. SLACK: I don't see how this is irrelevant in 25 any way. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 146 of 197 146 1 THE COURT: I'll let you continue. I think I -- I 2 mean, there'll come a point when -- the issue isn't, to me, 3 relevant as much as it is that I think much of this has been 4 covered, but I'll let you continue. 5 I'm doing my best to keep track of what you've asked already 6 and you don't need to do it repeatedly. 7 BY MR. SLACK: 8 Q 9 call the "reconciliation process," correct? 10 A I'm sorry, could you repeat that? 11 Q Your counsel asked you questions and you talked about 12 what your counsel talked about as a "reconciliation process" 13 for the settlement payment, correct? 14 A Yes. 15 Q And you were personally involved in the reconciliation 16 process, correct? 17 A I was. 18 Q And you agree that it was important for you to 19 understand what the settlement agreement provided with 20 respect to the reconciliation process for you to participate 21 in that process, correct? 22 A Yes. 23 Q And under the settlement agreement, following the 24 execution of the settlement agreement through the effective 25 date, Customers Bank and KServicing were required to work All right. And bear in mind that Now, your counsel asked you about what I'll Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 147 of 197 147 1 together in good faith to promptly reconcile the amounts of 2 the disputed KServicing fee holdback and the disputed 3 KServicing fee remittance holdback as of the petition date to 4 determine the appropriate amount of the settlement payment, 5 correct? 6 A Yes. 7 Q And so the agreement had a mandatory requirement under 8 the settlement agreement for the parties to work 9 cooperatively to reconcile the settlement payment calculation 10 up through the effective date, correct? 11 A Yes. 12 Q And there's nothing in the settlement agreement, 13 however, that presented the parties from working 14 cooperatively in good faith after the effective date to 15 continue to reconcile the settlement payment calculation, 16 correct? 17 MR. STERNBERG: I object. We're now veering into 18 legal conclusions and something that's -- that is actually, 19 clearly, prohibited by the settlement agreement in the 20 integration clause. 21 22 23 MR. SLACK: Your Honor, I don't think that's an appropriate objection with a question. THE COURT: So given the testimony already 24 elicited about the parties' understanding of what the 25 expectations were, I'll permit the witness to answer the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 148 of 197 148 1 question to the extent it's focused on her understanding of 2 the agreement at the time that she was engaged in the 3 process. 4 So, with that, you can answer the question. 5 THE WITNESS: My understanding was that the 6 settle -- the reconciliation was up until the settlement 7 agreement date and then we were not going to continue to do 8 that -- any further reconciliation of the payment. 9 BY MR. SLACK: 10 Q 11 actually prevented the parties from continuing to work 12 together cooperatively outside of the mandatory provision 13 that was in the settlement agreement? 14 MR. STERNBERG: 15 THE COURT: 16 And what did you understand in the settlement agreement Same objection. I'll overrule the objection, and she can answer to the extent of her understanding. 17 THE WITNESS: I could not make that analysis or 18 interpretation. 19 BY MR. SLACK: 20 Q 21 which is KS -- which is our Exhibit 18 -- no, that's your 22 declaration, sorry -- sorry, our Exhibit 1, it provides at 23 paragraph 8, and I'll do the reading that: Now, if you take a look at the settlement agreement, 24 Within three business days following the effective 25 date, CB shall pay to KServicing in immediately available Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 149 of 197 149 1 funds in an equal -- an amount equal to the settlement 2 payment. 3 Do you see that? 4 A I do. 5 Q And then, of course, the settlement payment we went 6 through is defined, in turn, correct? 7 A Yes. 8 Q And it was your understanding that there was nothing in 9 the settlement agreement that made it so that Customers Bank 10 could pay KServicing an inaccurate amount of the settlement 11 payment, correct? 12 A I'm not sure I'm following what you're saying. 13 Q Well, in other words, the settlement agreement actually 14 requires that the correct amount be paid to KServicing, 15 correct? 16 A Of course. 17 Q And you don't -- just because the reconciliation period 18 ended did absolve Customers Bank of the obligation to pay the 19 accurate and correct amount of the settlement payment, 20 correct? 21 A 22 determination. 23 Q 24 the communications with KServicing during this mandatory 25 reconciliation period provided in the settlement agreement, I don't know. I'm not a lawyer. I couldn't make that Now, you were, again, you said, personally involved in Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 150 of 197 150 1 correct? 2 A Yes. 3 Q And you and your colleagues at Customers Bank exchanged 4 numerous emails with KServicing during this mandatory 5 reconciliation period, correct? 6 A Yes. 7 Q And isn't it the case that you also participated in 8 virtual meetings with KServicing during this mandatory 9 reconciliation period; is that correct? 10 A It is. 11 Q So, you I want to fast-forward during that time to 12 November 9th, and November 9th was the effective date of the 13 settlement agreement, correct? 14 A Yes. 15 Q And do you recall on that day that there was a 16 telephone call between representatives of Customers Bank and 17 KServicing regarding the settlement payment? 18 A I don't recall. 19 Q You don't recall that conversation? 20 A I have a lot of calls. 21 during the day. 22 it was about, perhaps I could -- 23 Q 24 time where Mr. Sachs informed representatives of KServicing 25 that the parties would have, again, in substance, the ability I mean -- I mean, I'm on calls constantly I can't remember what -- if you tell me what Well, do you recall a conversation in or around that Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 151 of 197 151 1 to continue reconciling through the weekend? 2 A Perhaps. 3 Q Did you take a look at Ms. Evans' declaration? 4 A I did. 5 Q Did you see that part of her testimony included a 6 conversation where she testified that Mr. Sachs, on the 7 effective date said, We can continue to reconcile through the 8 weekend. 9 I don't recall, though. Do you recall that? 10 A Okay. Do I recall reading it? Yes. 11 Q And do you deny that that conversation took place? 12 A Again, I don't recall that exact conversation. 13 recall whether that was said or not. 14 Q 15 that conversation took place, correct? 16 A 17 kind of muddy at this point. 18 Q 19 November 9th, were planning on continuing to reconcile past 20 the effective date; isn't that correct? 21 A 22 discussed. 23 Q 24 which is an email, and if you look at page 4 of 5, depending 25 how, I guess, depending how it's printed, but do you see that I don't But in your declaration, you certainly didn't deny that I -- if it was in -- perhaps. I don't know. It's all And isn't it true that you also, at that time, on I don't believe so. I don't think that that was ever Will so, let's take a look at KServicing Exhibit 12, Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 152 of 197 152 1 you emailed Ms. Evans at 4:02 p.m. 2 Do you see that email? 3 A Yes. Yes. 4 Q And this is on November 9th, correct? 5 A It is. 6 Q And that's the effective date, correct? 7 A I guess. 8 a timeline of all the dates and the settlement report, but 9 I'm relying that you are accurate. 10 Q I'm really confused. I'd have to see, like, And what you tell Ms. Evans is, quote: 11 "Just checking in to be sure you are still sending 12 over the file. 13 to have time to provide feedback by the end of the day 14 tomorrow." 15 Friday is a bank holiday for us so we'd like Do you see that? 16 A I do. 17 Q And the "end of the day tomorrow" would have been after 18 the effective date, correct? 19 A I guess. 20 Q And so it's fair to say that as of November 9th at 21 4:02, you were expecting to continue to reconcile past the 22 effective date, correct? 23 A 24 trying to, like, figure out the timeline here. 25 effective date was the 9th and then we had to put together Well, the payment was made on November 14, so I'm just So the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 153 of 197 153 1 the payment, and it looks like the payment was sent on 2 the 14th, so that makes sense. 3 Q 4 shortly after this email, where Customers Bank stopped 5 communicating with KServicing concerning their 6 reconciliation? 7 A 8 probably some (inaudible). 9 Q 10 time of your email that we just looked at, did there come a 11 time when you stopped talking to KServicing about the 12 reconciliation process? 13 A 14 point, we had all of the data that we needed and we were 15 putting all of the bits and pieces together to be able to 16 determine a payment amount. 17 intentional stop having any conversation with them, if that's 18 what you're implying. 19 Q 20 past the effective date, correct? 21 A 22 legally, what the settlement discussion was (indiscernible) 23 that was not really something that I was involved in. 24 Q 25 talking with KServicing about the settlement payment? Now, did there come a time, at or about this time, I think that once we made the payment over, there were Before the payment, but after this time. I don't know that it was intentional. After the I think at that I don't think there was an So, if your view, the reconciliation process could go No. Again, I couldn't make that determination from, Did anyone ever tell you in words or substance to stop Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 154 of 197 154 1 A No. 2 Q After November 9th, did you, in fact, stop talking with 3 KServicing about the settlement payment? 4 A 5 had -- we continued to interact with KServicing and whether 6 this topic was brought up, but I do know that we -- again, I 7 think going back, it sounds like we're referencing some 8 holidays here, so we probably were trying to get all the 9 information because we knew we had this deadline to make a 10 payment. 11 payment to them. 12 reconciliation to be able to come together to agree on that 13 analysis. 14 Q 15 showed Mr. Sachs, you know, sent in his email, which was 16 incorrect, did Customers Bank provide KServicing with a draft 17 calculation of the amounts it intended to pay? 18 A 19 (inaudible). 20 Q 21 amounts that Customers Bank was intending to pay were sent to 22 KServicing? 23 A I was not involved in that. 24 Q And are you aware that, at any time, whether Customers 25 Bank shared any kind of trial-balance analysis with Again, I don't remember every conversation. I mean, we I do recall that it was a clear, we need to get the We need to get the data. We need to do the So prior to Customers Bank paying the amount that we I was not involved in the conversations between So, you're not aware of any communication where the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 155 of 197 155 1 KServicing prior to paying the amounts that were due? 2 A 3 part of the reconciliation process. 4 discussion, especially early on because that was one of the 5 key data elements into determining the reconciliation amount, 6 which we determined the remittance payments that were due 7 without not factoring in (indiscernible) balance. 8 Q 9 and 24, you set out a, what you say is a trial-balance 10 analysis. 11 We had a lot of discussion about the trial balance as All right. That was a pretty heavy So in your declaration, in paragraphs 23 Do you recall that testimony in your direct? 12 A Yes. 13 Q Did you disclose any of that at any time to KServicing 14 prior to making the settlement payment? 15 A No. 16 Q So, Ms. White, I'd like to go through the half-page 17 analysis, which is Customers Bank Exhibit 13, and Ms. White, 18 did you personally create this one page? 19 A I did. 20 Q Did anyone at Customers Bank assist you in creating 21 this one page? 22 A 23 inputs to it and yes. 24 Q And who else provided data inputs? 25 A Our accounting department. I mean, there were other resources that provided data Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 156 of 197 156 1 Q 2 department? 3 A 4 from our data team. 5 reconciliation that we had done across on a monthly basis. 6 It was pulling in what was our balance on our GL. 7 we showing as the trial balance at the time. 8 provided by both, our accounting, and then validated by our 9 data team in what we have used on a monthly basis for our 10 reconciliation. 11 Q Were those sent to you by email? 12 A Probably discussions over a call, but I mean those are 13 somewhat items that we publish month over month and have 14 discussed with Kabbage, like what our trial balance is versus 15 what they have. 16 Q 17 number of people on the financial team that were doing a 18 certain amount of reconciliation; do you recall that? 19 And what data inputs were provided by the accounting The current balance, the -- I should say that also came So, it was a compilation of What were So, that was So, you had said just a minute ago that there were a Can you explain what reconciliation they were doing. 20 A Yeah. Every month when we close our books, we use the 21 trial balance from our servicers in conjunction with the 22 remittance report to be able to tie out our financials and 23 for reporting. 24 here's how much is remaining, per the servicer, that needs to 25 be paid back. So, it basically tells us, of this portfolio, Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 157 of 197 157 1 We compare that with the cash that has flowed in 2 through the servicers to be able to say, Does our GL balance, 3 which is really kind of a shadow trial balance reconcile and 4 tie out to what the servicer has, and we do that every month 5 and we would provide those results to Kabbage every month 6 where there were discrepancies to work through and resolve 7 those. 8 Q 9 you described in 23 and 24 of your declaration that was done 10 by the financial team, correct? 11 A Financial and data team. 12 Q Yeah. 13 of that information, any of the work that had been done by 14 either the data team or the financial team to KServicing? 15 A 16 balance. 17 show. It's a GL balance. 18 Q Well, let's take that. 19 worksheet -- 20 A Uh-huh. 21 Q -- there's something that says "CBGL." 22 And that was work for this trial-balance analysis that And have you -- did you personally provide any Well, I mean, they've seen the results, but it's our GL It's from our -- I mean, there's really not work to Do you see that? 23 A Yes, I do. 24 Q CB is Customers Bank? 25 A It is. If you look at the one-page Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 158 of 197 158 1 Q And GL is general ledger, right? 2 A Right, uh-huh. 3 Q And what you're saying is there's a bunch of 4 reconciliation work that goes into that CB ledger, correct? 5 A 6 of what is in a trial, but it's not like a loan-level detail 7 that would have any meaning to provide to Kabbage. 8 Q 9 or reconciliation to KServicing, correct? 10 A 11 information. 12 balance. 13 which is really one in the same. 14 So, we -- they were very familiar with that information. 15 Q 16 this particular analysis, you didn't provide any of the work 17 that had been done by your teams that did work for you with 18 respect to the general ledger, correct? 19 A 20 discussed what the starting point of the loan portfolio 21 because, initially, we wanted to set out to do a loan-by-loan 22 reconciliation. 23 the original loan population, what are the balances. 24 provided to them where we saw inaccuracies in theirs based on 25 what we were showing as the current balance. Well, it's a running balance from our financial system Yeah. And you didn't provide that general ledger work Well, no. I mean every month we would provide that We would say, Here's what we show the trial Here's what we have in our trial balance or GL, Right. Here's what you're showing. But with respect to whatever you were using for We did. Again, when we started the reconciliation, we So, we talked very early on about what is So, we We Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 159 of 197 159 1 absolutely did have those conversations. 2 Q 3 you did and your teams did -- you said your teams did work 4 and that they sent emails -- did you show any of that work or 5 analysis to KServicing? 6 A Yes, I believe we did. 7 Q And when you say you did, you actually gave KServicing 8 the emails that you got when you prepared this? 9 A 10 balance. 11 had seen as discrepancies. 12 literally, in meetings, in many a meetings, walked through 13 those with them where we saw, this is what we're seeing and 14 this is what you're seeing. 15 Q 16 you actually share how you resolved those discrepancies for 17 purposes of this particular analysis? 18 A 19 their end. 20 couldn't use any of the trial balances and that's where they 21 said, Okay, well, we'll give you a new trial balance. 22 Q 23 supplemental report, correct? 24 A They -- yes, they created a new report for us. 25 Q And then Customers Bank would take that supplemental Right. And did you -- but did you show the work that So, again, just the line item here is just a GL But we did on calls, walked through our, what we Right. We showed them examples. So, there are a bunch of discrepancies. We, Did No, we -- there are no -- the discrepancies were on That is where we later on said, we realized we Well, in fact, what KServicing did is did a Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 160 of 197 160 1 report and somehow combine it with whatever it had in its own 2 files, correct? 3 A No. 4 Q So, what did Customers Bank do with the supplemental 5 report? 6 A 7 for this settlement, when they handed it to us they said, It 8 does not reflect guaranty payments. 9 we'll -- we can -- they wouldn't do it, so we said, Okay, we 10 can do that math and we will adjust it for the guaranty 11 payments. 12 there were some forgiveness payments that were missing. 13 Q 14 and there were payments that were missing, did you provide 15 that to KServicing? 16 A 17 what their settlement payment was. 18 was really no value. 19 were telling us was the amount of holdbacks. 20 Q So, let's take a look at the two scenarios that you 21 have. You have scenario one and scenario two in this one 22 page here. 23 The supplemental report that they created specifically So, we said, Okay, And then we also did a validation and found that And when you say you did a valuation -- a validation No, because our analysis showed that we agreed with So, at this point, there We really weren't disputing what they Do you see that? 24 A I do. 25 Q And scenario one is what? How would you describe Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 161 of 197 161 1 scenario one? 2 A 3 scenarios, we started with our outstanding GL balance for the 4 whole portfolio. 5 amount that Kabbage told us was the holdback. 6 subtract what we had in our GL balance and then we reduced 7 that balance by the 28 million that they told us that they 8 owed us, that basically resulted in a trial balance of 9 174 million. 10 It's hard to tell here, but the color-coding in the two And in scenario one, we plugged in the So, when you So, what we're trying to show here is in a much simpler 11 term, if I gave them a hundred dollars and they gave me 50 12 back, do I see $50 remaining on my trial balance? 13 just trying to do simple math at the aggregate level to 14 account for all of those funds. So, we're 15 So, we plugged in the amount that they told us they 16 owed us and we said, Okay, well, that means that our trial 17 balance should be this. 18 that they created for us we said, That's within $1300 of what 19 they told us the trial balance is. 20 We felt comfortable with that. When we looked at the trial balance That's pretty darn close. 21 We did the inverse in scenario two where we plugged in 22 the trial balance amount and said, Okay, if this is the trial 23 balance amount, how much would that mean you would owe us in 24 holdbacks? 25 $1300. And, again, when we did that math, it was within So, that was like a just a final data point since we Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 162 of 197 162 1 didn't have any other validation, other than the Synovus 2 accounts to ensure that all the funds were accurately 3 transferred over to us and applied to the account balances. 4 Q 5 principal remittance returns due to Customers Bank." 6 there's, in scenario two, it's 28,154,347. 7 In scenario two, there's a line that says, "total And Do you see that? 8 A Yes. 9 Q What work had to be done to derive that number? 10 A If you take the 202 and you subtract the one fifty-four 11 six forty-two and then you -- 12 Q 13 that? 14 A 15 I'm sorry, you subtract -- what do you subtract from The 202. And I don't have my spreadsheet in front of me to know 16 the actual math in here so I'm at a little bit of a 17 disadvantage, but, basically, the 202 minus their trial 18 balance, which is the one seventy-four six forty-two, when 19 you subtract that, you get the twenty-eight one fifty-four. 20 Q 21 the one seventy-four six four two? 22 A 23 as part of settlement. 24 that guaranty payment needed to be removed from it. 25 Q Okay. And so, how -- what did you have to do to reach That was the trial balance that they had provided to us And then, as I mentioned earlier, So that's just a plug number? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 163 of 197 163 1 A 2 provided us and then there's the footnote there. 3 Q 4 down here that talks about excluding guaranty payments and 5 then also, it says, Comparing the amount of forgiveness 6 received at the loan level and compared to the balance change 7 per Kabbage report at the level. 8 Yes. Yep. That is actually, literally what they And then the -- and then there's a footnote, right, Did you provide KServicing with any of that analysis or 9 backup that you did there? 10 A 11 we -- they provided us this special trial report as part of 12 settlement. 13 remove the guaranty payment, so we know this is currently 14 overstated, because it doesn't take into account guaranty 15 payments. 16 used that, and we subtracted the guaranty payments from the 17 trial, and that's what this footnote says on -- 18 Q 19 payments? 20 A That's data that comes directly from the SBA that -- 21 Q I'm sorry, what's that? 22 A Data that comes directly from the SBA that both, we and 23 KServicing has. 24 Q And did you have a separate calculation for that? 25 A For the amount of guaranty payments? So, this is what I had mentioned earlier. So, when When they gave it to us, they said, We can't So, that was the best that they could do, so we And how did you go about calculating the guaranty Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 164 of 197 164 1 Q Yes. 2 A It's just a report that comes from the SBA. 3 again, it's all information that KServicing has. 4 Q 5 interest, correct? 6 A This is strictly principal. 7 Q Strictly principal. 8 in the payment at all, correct? 9 A That's correct. 10 Q And in this analysis that you did, did you start with 11 the Synovus account or did you start with information that 12 went earlier than that, that would be captured by the Wells 13 Fargo account? 14 A 15 was strictly an accounting of all of the portfolio funds. 16 This was looking at all of the funds. 17 whether it was Wells -- I mean, some of this would have been 18 Wells Fargo. 19 But, And the number in scenario one didn't include any So, it didn't include the interest We did not factor in any bank information here; this So, it doesn't matter So, we started with $2.5 billion and our outstanding 20 balance was $202 million. So, some of that money that had 21 been returned to us presumably was from Wells Fargo. 22 Q 23 spreadsheet that was provided, the one-page document, when 24 was that created? 25 A Now, I didn't ask this, but when did -- when was this As before we made the final payment, when we were doing Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 165 of 197 165 1 our just kind of a check to say, Okay, does this make sense? 2 Do we feel like we are accounting for, financially? 3 doing the right thing and are we getting all the money? 4 we account for all of those funds that were disbursed? 5 Q 6 crack? 7 A I think there were drafts, I believe. 8 Q And what were the changes in the drafts that were done? 9 A We did the same analysis using the loan schedule RA. 10 We used their supplemental. 11 were different. 12 talked to them previously. 13 were errors in the trial balances and that's how we got to 14 getting this accurate trial balance from them. 15 Q 16 those drafts to KServicing, correct? 17 A 18 it, like, we said we needed an accurate trial balance. 19 were errors in those. 20 we realized the guaranty -- 21 Q 22 you provide any of those drafts to KServicing? 23 A 24 don't know that there was a final draft or anything that 25 would be -- Are we Can Were there any drafts of that or was this the first We looked at why their balances We saw the loan scheduled RA, which we had That's why we were saying there And none of those drafts, you didn't provide any of We did -- well, we went back and talked to them about There So, we did talk about the errors, but Let's see if you got my question. You did drafts. It wasn't a -- it was more of a we found the errors. Did I Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 166 of 197 166 1 Q 2 maybe it's me, I'm sorry, but did you provide any drafts of 3 your trial-balance analysis to KServicing, yes or no? 4 A 5 absolutely. 6 Q 7 I didn't ask about final drafts. And, again, just, I would say, yeah, we provided those results to them, You did. So, did you ever provide -- you testified you didn't 8 even provide the trial balance to KServicing prior to making 9 the payment. 10 the drafts of that analysis? 11 A 12 don't. 13 Q 14 the time of making the payment, why didn't you put this in 15 your declaration? 16 A I'm sorry, I'm not following what your point is. 17 Q This wasn't in your -- this one page wasn't in your 18 declaration. 19 time that you made your payment, why didn't you put this in 20 your testimony? 21 A For what? 22 Q No. 23 in this matter? 24 A 25 you're -- So, is it now your testimony that you provided So, just to be clear, they own the trial balance. We It's their trial balance. If -- you know, if you had done this analysis back at Why wasn't this analysis, if it was done at the For today? You remember putting in a declaration in this case There were several. I'm sorry, I'm not clear what Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 167 of 197 167 1 Q 2 declaration, correct? 3 A Yes. 4 Q And you didn't include this one page here, correct? 5 A Okay. 6 Q Why not? 7 A I think the one that we submitted today, we did. 8 Q You believe that you put in a declaration today? 9 A Like, honestly, like, I'm not sure. 10 you're asking. 11 previously. 12 Q So, is your declaration in front of you? 13 A I actually don't think -- no, I have this one. 14 the one? 15 Q 16 page in your declaration, yes or no? 17 A This one, originally, no. 18 Q Why not? 19 A I don't think it was -- it wasn't relevant, I guess, to 20 the conversation. 21 22 Okay. 24 Is this Is the one page here, do you include the one I'm not sure. MR. SLACK: Can you give me a few minutes, Your THE COURT: Certainly. (Pause) // I'm not sure what I thought that we had provided this Honor? 23 25 But in connection with this motion, you did a Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 168 of 197 168 1 BY MR. SLACK: 2 Q 3 remember the email that I showed you that wasn't an exhibit 4 that was Mr. Sachs' email with the calculation of the first 5 payment? 6 A Yes. 7 Q Do you have that in front of you? 8 A Yes. 9 Q And it shows a nineteen four six nine three five five 10 payment; is that correct? 11 A Yes. 12 Q And you said that you had done the trial balance before 13 the payment was made, correct? 14 A Done the trial balance? 15 Q You said you had done your trial-balance analysis, 16 that's that one page here -- 17 A The scenario. 18 Q -- prior to the time that you made -- that Customers 19 Bank made the payment, correct? 20 A Yes. 21 Q And so, did the trial-balance analysis at that time 22 show a deviation of more than a million dollars at that time 23 from the settlement payment? 24 A Say that again. 25 Q So, you said you had done a trial-balance analysis at So I do have one last question for you. Do you Did the -- Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 169 of 197 169 1 the time and the first payment that was made was nineteen 2 four. 3 more than that, correct? 4 A Uh-huh. 5 Q So, did the trial-balance analysis that you originally 6 did show a deviation of more than a million dollars at the 7 time that you made the initial payment? 8 A No, it only showed the thirteen eighty-two. 9 Q And so even though that your payment here was a million 10 dollars less, you're saying the trial balance stayed the 11 same? 12 A Yeah, because we weren't factoring in interest. 13 Q Because, I'm sorry? 14 A We were just looking at principal. 15 Q And so the fact that you double-counted interest 16 wouldn't have mattered? 17 A You made -- ultimately, you paid a million dollars No. 18 MR. SLACK: 19 No more questions. 20 THE COURT: 21 All right. Okay. Thank you. Redirect? REDIRECT EXAMINATION 22 BY MR. STERNBERG: 23 Q 24 period started on a date certain, the date the settlement 25 agreement was signed, but ended on a date that was in flux, Ms. White, you understood that the reconciliation Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 170 of 197 170 1 the date that this Court would enter the settlement 2 agreement, correct? 3 A Yes. 4 Q And you didn't know exactly which date the Court would 5 enter the settlement agreement, did you? 6 A No. 7 Q You did know that late in the day on Friday, 8 November 4th, that there was a hearing in this court on 9 Monday, November 7th where Kabbage was moving the Court to 10 enter that settlement agreement, correct? 11 A That's my recollection. 12 Q And you also understood that there was some urgency 13 once the settlement agreement was entered because then 14 Customers Bank had three business days in order to make a 15 payment? 16 A Yes, I did. 17 Q Did you know what time of day Judge Goldblatt entered 18 the settlement agreement on November 9th? 19 A No, I just knew we had a deadline that we had to meet. 20 Q Do you have a recollection of what time of day on 21 November 9th or when you found out that the settlement 22 agreement had been entered? 23 A I don't. 24 Q But you do have a memory of there being some urgency to 25 make the payment once you found out about the settlement Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 171 of 197 171 1 agreement? 2 A Yes. 3 Q Mr. Slack asked you a couple of questions that began as 4 a matter of math and then he would ask a question off of 5 that. 6 evidence as Exhibit 22, and it's Tab 4 of your booklet. 7 If you would open up your thin booklet to what is in As a matter of math, can we get to $27.1 million two 8 different ways in this document -- 9 A Yes. 10 Q -- both with the math at the top of the page and the 11 math at the bottom of the page? 12 A Yes. 13 Q And from your perspective, did you use the bottom of 14 the page for your analysis, the CUBI remittance file, plus 15 the variance? 16 A We did. 17 18 MR. STERNBERG: That's all the questions I've got, Your Honor. 19 THE COURT: Okay. 20 MR. SLACK: I have nothing else. 21 THE COURT: Okay. 22 Mr. Sternberg, any other evidence? 23 MR. STERNBERG: 24 THE COURT: 25 MR. TSEKERIDES: Not from Customers Bank. Mr. Tsekerides? Oh, the witness can be excused. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 172 of 197 172 1 2 THE COURT: testimony. 3 So thank you very much for your You can step down. (Witness excused) 4 MR. TSEKERIDES: I didn't know if you wanted to 5 take a short break, if you wanted to go to closing argument, 6 if you wanted to hear argument. 7 THE COURT: So, I do want to hear argument. 8 You'll be stunned to hear I have some questions for both of 9 you. 10 MR. TSEKERIDES: Okay. 11 THE COURT: 12 five minutes before launching? Would it be helpful to you to take 13 MR. TSEKERIDES: I mean, I'm ready to go now. 14 MR. STERNBERG: I wouldn't mind a short break, 15 Your Honor. 16 THE COURT: All right. Why don't we take five 17 minutes. We'll come back -- it's now about a quarter of -- 18 we'll come back and this time I'll be on time, I promise. 19 We'll be back on at 10 of, so just five minutes. 20 MR. STERNBERG: Great. 21 MR. TSEKERIDES: Thank you. 22 THE COURT: And we're in recess, thank you. 23 (Recess taken at 2:45 p.m.) 24 (Proceedings resumed at 2:51 p.m.) 25 THE COURT: Mr. Tsekerides, you can proceed. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 173 of 197 173 1 MR. TSEKERIDES: So, Your Honor, first, I'd like 2 to do the closing first for the debtors if that's all right. 3 I have -- we can put up on the screen, but I'm kind of old 4 school, so I do have a small handout, if I can hand that up? 5 THE COURT: That's fine. Whatever will help me 6 get it right, I'll take it in any form. 7 MR. TSEKERIDES: So, if you look at the first 8 page, you know, I think it lays out that we have a discrete 9 issue here and I think you heard from both parties that 10 there's a formula in the settlement agreement that had 11 $58 million and then you're supposed to deduct certain 12 things, and those things are the fee holdback, which you 13 might have heard about, the $8.3 million, and then broken 14 out, and I think this is what Ms. White was talking about 15 when she said there are three components, there's the 16 canceled loans, which we had a dispute about, but we don't 17 anymore, and so it's just about the funds collected from 18 borrowers. 19 settlement payment. 20 You take the 58, you minus those, you get the The next page reflects what that calculation is 21 from the debtors' perspective. On the left-hand side is what 22 CUBI had originally and on the right-hand side, everything is 23 held constant, except for the borrower remittances, and 24 that's where the one five five comes in. 25 heard from everyone that the goal was to try to find the And I think we've Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 174 of 197 174 1 2 right number. Now, you've heard testimony that, you know, there 3 was a deadline or whatever, but at the end of the day, and 4 even CUBI says in its papers, and I'll get to that at the 5 back end, that they wanted to get to the right number. 6 what went into the number? 7 witnesses, undisputed, that the remittance file was a key 8 component for both parties and they both used it in their 9 calculation. 10 loans on it that had payments already made. 11 So, We've heard from all the You've also heard that the remittance file had These weren't people going out to try to find some 12 loans, you know, 90,000 loans and you isolated five. That's 13 not what happened. 14 had loans on it that supposedly were money received from 15 Kabbage from customers that were supposed to go to CUBI. 16 That's what's on that file. What happened was there was a file that 17 Ms. Williams discovered, after getting a file from 18 Mr. Eidson the former CFO -- he left -- that there were five 19 loans on that list, not some random loans they plucked out of 20 thin air -- from that list that were already paid to CUBI. 21 You didn't hear a word today that they didn't get that money. 22 You didn't hear a word today, Oh, that came from a different 23 bank account so it doesn't count. 24 that were on the list that they said were not already paid. 25 Really, at the end of the day, that's what we're saying They got paid for loans Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 175 of 197 175 1 2 supports why we're entitled to the one five five. Now, if you go through the next document that I 3 put in the slide is the email from Mr. Eidson, October 21st, 4 2020, sent to Patricia Curtis. 5 works there or not, I don't know, but they could have checked 6 to see if they got paid the amounts that are reflected there. 7 It's an easy checkable thing. 8 THE COURT: 9 MR. TSEKERIDES: 10 THE COURT: Now, presumably, whether she So, Mr. Tsekerides, can I stop you? Yes, please. So, the challenge of this motion is 11 that we live in an imperfect world -- 12 MR. TSEKERIDES: 13 THE COURT: Agreed. -- and it appears, and probably for 14 good and sound reason, that no one has done a complete, 15 forensic accounting of every penny of the history of the 16 relationship. 17 task that I've got is to do the best I can to get it right, 18 given information that's the best that we have. 19 That's -- you know, you can complain about that if you want, 20 but that's life. So, what we've got are what we've got and the 21 MR. TSEKERIDES: 22 THE COURT: Okay. I agree. So, let's assume for this purpose that 23 you persuaded me that there's a million and a half dollars 24 that you had paid before that was not accounted for in the 25 original remittance file, and if it had been accounted for, Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 176 of 197 176 1 they would have owed you a million and a half dollars more, 2 but let's assume that that is correct. 3 like, I'm cartooning it, but it's sort of like, whatever, 4 because we've looked at this and from a global perspective, 5 it looks to us like the aggregate math of their revised 6 calculation was correct, and so maybe you're right that there 7 was a million and a half dollars wrong here, but it must 8 necessarily follow, if that's true, there's an offsetting 9 million-and-a-half-dollar mistake somewhere else. 10 MR. TSEKERIDES: 11 THE COURT: 12 MR. TSEKERIDES: Their argument is, I have two responses. Okay. So, the first response is, that's 13 nice, but it's not "whatever." 14 you used, for your calculation, you used the remittance file. 15 That's what you used. 16 for it, I sent it to you, you used it, and we found out later 17 that you actually got paid before. 18 imperfect, but we agreed that this remittance file -- 19 20 THE COURT: We agreed to a process and I didn't make you use that. Right. You asked I agree everything's Can I ask a more specific question? 21 MR. TSEKERIDES: 22 THE COURT: Sure, please. In a world where you get to point to 23 the one and a half million dollars and say, Look, I can show 24 you five loans, it's a precise number. 25 this amount twice this way, that's not right. You were getting paid Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 177 of 197 177 1 MR. TSEKERIDES: 2 THE COURT: Okay. Assume you're right about that, why do 3 you also get to do that and collect this $497,000 remaining 4 variance, you have to be resolved amount? 5 6 MR. TSEKERIDES: Honor. We're not collecting that, Your We're not collecting that. 7 If you look at this breakdown -- 8 THE COURT: 9 MR. TSEKERIDES: Uh-huh. -- if you look at the breakdown, 10 which is I think the second page, the one that has the 11 calculation -- 12 THE COURT: Right. 13 MR. TSEKERIDES: -- all of these are already 14 accounted for. 15 terms of what the numbers are that are going in. 16 agreed to these except for the remittance payments. 17 keeping anything extra. 18 said, You know, there's some red, there's some blue on here, 19 credits were given. 20 agreed to. 21 These are what everyone is agreeing to in We've all I'm not The parties have gone through and This was the analysis that the parties And what we're saying is that number, the 22 27,106,862 should really be 25,551,205. 23 saying. 24 THE COURT: 25 MR. TSEKERIDES: That's all we're I see. We're saying we paid you. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 178 of 197 178 1 Everything else, we're taking from their calculation. 2 THE COURT: Okay. 3 MR. TSEKERIDES: The other point I think that I 4 make, so you have a loan-by-loan analysis, using a file that 5 everyone was using, and on the other side, you have, 6 respectfully, a black box. 7 file, black boxes and shadow files are not substitutes for a 8 loan-by-loan analysis, which is what we did. 9 know exactly what they did. 10 When we heard about a shadow I still don't Maybe you do, but I don't. What I do know is that we heard testimony from Ms. 11 Williams that the remittance file, and even from CUBI, that 12 the remittance file was for money not paid yet to CUBI. 13 we know that there were at least five loans that they were. 14 At its basic core, that is our position. 15 that the parties agreed to use, this is the outcome; that's 16 why we think we're entitled to the one five five. 17 THE COURT: 18 MR. TSEKERIDES: 19 But For the materials Okay. I mean, that's really it in the nutshell, Judge. 20 THE COURT: I understand your position. 21 MR. TSEKERIDES: 22 THE COURT: 23 MR. STERNBERG: Okay. Mr. Sternberg? Your Honor, I'd like to start with 24 a timing issue, because I think the timing really matters 25 here in ways that are broader than perhaps what the witness Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 179 of 197 179 1 testimony was. 2 dates. 3 that's the date that you entered the settlement agreement. 4 The reconciliation period was defined by two The end date happened to be November 9th, because THE COURT: So, can I ask you this question about 5 that? So, your argument on this question, it's almost as if 6 you're suggesting when we read the document, providing the 7 information within the period is essentially like a condition 8 precedent to being able to get credit for those payments. 9 Is that essentially what you're saying? 10 MR. STERNBERG: 11 12 13 It's slightly different than that. Let me back up. We were obligated to make a payment that was going to fund this bankruptcy -- 14 THE COURT: Oh, I understand. 15 MR. STERNBERG: -- three days from the date you 16 entered the settlement agreement. 17 THE COURT: 18 MR. STERNBERG: 19 Monday morning. 20 information. Right. The hearing was scheduled for Friday night, we're still waiting for 21 THE COURT: Right. 22 MR. STERNBERG: 23 coming in at 7:48 p.m. Friday night. 24 fulfilling its obligations under the settlement agreement. 25 It has to rely on the information it's getting on the bank Important, critical information is The bank is intent on Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 180 of 197 180 1 account. 2 THE COURT: So, I understand that, okay. I get 3 there was a hurry and I get the parties agreed, you know, 4 there's an urgency here. 5 and so we set up a process in which you all need to kill 6 yourselves to do the best you can to get it as ready as you 7 can get it as quickly as you can do. 8 committed to. 9 that rush there's something we got wrong, we're done. 10 11 That's what everyone Your position is, and if it turns out that in And my question is, what in the documents says that? 12 13 We need the cash -- I was here -- MR. STERNBERG: The document doesn't specifically say that. 14 THE COURT: Right. Why should I draw that 15 inference, particularly, because given all of the principles 16 of contract law that would counsel against finding, 17 essentially, a forfeiture of money to which you're actually 18 entitled based on a foot fault, why would I read this to 19 create, essentially, that consequence as a matter of ordinary 20 contract interpretation? 21 MR. STERNBERG: Because the party in the bank's 22 shoes here was obligated to make a 20-plus-million-dollar 23 payment. 24 that's correct, and so it does two things. 25 pleads for Kabbage to give it bank account information, It's got to do whatever it can to make sure that It begs and Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 181 of 197 181 1 remittance information -- it gets it late in the day 2 Friday -- and then it does a belt-and-suspenders. 3 to look at the information it's gotten, and you described the 4 world isn't perfect and I agree with you. 5 It tries They do a total trial balance reconciliation and 6 get within $1300. They're now comfortable that cutting a 7 check for $20 and a half million is the right thing to do and 8 they're obligated to do it on November 14th and they do it. 9 The principles of forfeiture I don't think really 10 apply here because we're relying on information that we're 11 entitled to rely on. 12 have to pay us the money three days from the entry, because 13 this is preliminary; we're still working on it. 14 the agreement and work it through. 15 None of that happened. They didn't tell us, Hang on, you don't Let's amend They wanted the money in 16 order to fund the bankruptcy and we were obliged to pay it. 17 We did the best we could. 18 And you're right, no one -- we certainly couldn't, 19 and they didn't go back and do a reconciliation of 99,365 20 loans. 21 five loans out of that portfolio, particularly when we've 22 heard evidence that there were monthly meetings where there 23 were 13,000 loans that had discrepancies in the amount of 24 $53 million. 25 say, Ah ha, later on we found out these five may have been It is improper, incorrect, inappropriate to pluck You can't just look at one bank statement and Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 182 of 197 182 1 2 overfunded. THE COURT: But doesn't -- if that's true, and 3 let's assume for this purpose that it is, right, that the 4 information, there were all sorts of problems with the 5 data -- it is what it is, right. 6 data and no one had it. 7 We all wish we had perfect Okay, so the data is imperfect. They point, however, to one and a half million 8 dollars in which it does seem like you're getting paid twice. 9 How is it appropriate to respond to that by using these 10 aggregate figures that are just a function of all of the 11 original flaws that you've pointed to? 12 MR. STERNBERG: Because getting paid twice, there 13 were billions of dollars that flowed through this 14 relationship for months on end. 15 THE COURT: I understand. If anyone had -- look, 16 I understand that doing a perfect accounting of this would 17 have cost more than is at stake, so I'm not really faulting 18 anyone for the decision to say, We're going to do the best we 19 can in a world in which resources are finite. 20 But in a world in which you didn't undertake to do 21 that, and, again, that could very well have been an eminently 22 sensible judgment, but in a world in which they can show 23 concretely, we're paying twice for this, and you haven't 24 responded by saying, Yes, and here's where that 25 countervailing error is, why isn't that -- why doesn't that Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 183 of 197 183 1 mean that the consequence of the imperfection falls on you? 2 MR. STERNBERG: Because the consequence of the 3 imperfection shouldn't fall on the party that has shown you 4 that everything balances out. 5 either of two things. 6 THE COURT: They've made no effort to do Well, first of all, you haven't shown 7 me. You showed me that it comes close enough for government 8 work, right, that's what, at best, you've shown me. 9 MR. STERNBERG: Thirteen-hundred dollars on a two- 10 and-a-half-billion-dollar portfolio I'd submit is more than 11 respectably close. 12 THE COURT: Okay. And the other side's 13 opportunity to take discovery into the basis for that, into 14 how you can make that judgment, you've not been as 15 forthcoming as you might be, right? 16 MR. STERNBERG: I disagree. Every piece of 17 information that goes into that analysis has been provided to 18 them. 19 THE COURT: Okay. 20 MR. STERNBERG: So, you come back to the party 21 seeking the money, the Movant, has done neither, a full 22 reconciliation of everything that went into the Wells Fargo 23 account and the Synovus account, nor a portfolio-wide 24 analysis. 25 don't have the information. We can't do a loan-by-loan analysis because we We could do, and did do, a Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 184 of 197 184 1 portfolio-wide. 2 And it ought to matter that the information we got 3 was not told to be preliminary, not said don't rely on it. 4 It said Synovus account reconciliation. 5 rely on it and the bank did rely on it. 6 THE COURT: It was reasonable to No, I understand you relied on it, but 7 it turns out you relied on it -- I mean, if -- it seems to me 8 that if you want to set up a system by contract in which you 9 say, This day is the last day -- and contracts do this, 10 right, like, any information provided hereafter will be 11 ignored, where everyone is on notice. 12 sets a formula for figuring out what's owed and it uses, sort 13 of objective criteria, and if the evidence of what's provided 14 is incorrect, it doesn't say, And if you discover later you 15 made a mistake, too bad, you're stuck with what you sent us, 16 right, it seems -- it would seem to me surprising that if 17 there was -- we set up a process that was rushed. 18 that on purpose. 19 But this basically We did We did it for good reason. The question is, what happens? What does the 20 contract do if, despite everyone's best efforts, there's 21 information that was incomplete? 22 say, Look, you're stuck with where we are? 23 MR. STERNBERG: Do we get it right or do we I think there are two responses to 24 that. One is the Movant hasn't shown that they've gotten it 25 right. What they've pointed to are five loans that for some Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 185 of 197 185 1 reason are sitting in this Synovus account reconciliation. 2 Who knows why they're there? 3 they are there. 4 that Synovus account was even set up. 5 It seems highly improper that They're from a different account from before And it conflicts with the -- there are a bunch of 6 numbers going on here. One is $26.6 million. That's what 7 they said was the CUBI remittance file amount. 8 there's this variance of half a million dollars. 9 their numbers. 10 Ms. White testified to: 11 it. 12 took it a step farther. And then Those are The best we can do to verify is what get the bank statements and look at That's the independent evidence, and she did and then 13 THE COURT: But it's not surprising, right, if 14 there were loans on which payments were remitted earlier and 15 that were also in those statements, it's not surprising, 16 then, that what is in the bank statements would therefore be 17 incorrect. 18 19 20 MR. STERNBERG: It would be odd for a Synovus bank statement to have a Wells Fargo payment in it. THE COURT: It doesn't. It has the loan in it as 21 to which the payment was made earlier, so it should have been 22 reduced from what was reflected. 23 MR. STERNBERG: Yes, and it appears that on those 24 five loans, there were payments made back in October, but who 25 knows on the other 99,360, whether there was a million five Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 186 of 197 186 1 missing from those. 2 THE COURT: Oh, I understand that your argument, 3 but you haven't shown me where that million five -- they've 4 shown me where this million five is and you haven't shown me 5 where the other million five is. 6 MR. STERNBERG: That's where I think I am. We've shown you that if we're 7 ordered to pay them a million five, we're out a million five. 8 We're missing a million five in our trial balance. 9 net loss to the bank. 10 It's a And this reconciliation process was bounded by 11 time. 12 reasons and it shouldn't be the bank that holds the risk for 13 getting suspect information that it didn't have time to go 14 back and check out on a loan-by-loan basis, or even the 15 ability to check out, when it then made a prompt payment on 16 time to fund the bankruptcy. 17 It was bounded by time, as you point out, for good There is -- if we had said, Okay, let's -- we're 18 going to take our time. We're going to have an effective 19 date of February 1st, the company -- there wouldn't be -- we 20 wouldn't be here. 21 THE COURT: Oh, I understand that. 22 MR. STERNBERG: And that might have given us the 23 time to do a loan-by-loan lookback analysis, but we wouldn't 24 be here now. 25 We'd be all fighting about other things. THE COURT: No, I understand that, but in the Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 187 of 197 187 1 period between the time you made the payment and the time 2 we're here to adjudicate the question of who owes what under 3 the contract, there's no longer an emergency. 4 MR. STERNBERG: 5 but how do we go back and do that? 6 Fargo -- 7 THE COURT: 8 MR. STERNBERG: 9 that is true. 10 to show you that -- 11 12 We don't have the Wells You have access to the discovery. We do have access to discovery, But it's, as the Movant, it's their obligation THE COURT: No, I understand, but they've shown me the 1.5. 13 14 There's no longer an emergency, MR. STERNBERG: And we've shown you that if we have to pay a million five, we're short. 15 THE COURT: You've shown me that you think that 16 based on the trial loan balance, which is, you know, less 17 than crystal clear exactly what that is -- and I'm not saying 18 it's nothing. 19 right. 20 we've got uncertainty. 21 I'm not saying -- and, look, you might be The problem is that's the question on which I think And that's -- look, I'm not -- I'm, to some 22 extent, struggling because I do feel like in a perfect world, 23 we'd, you know, boil the ocean and get all of it perfect. 24 understand that that game isn't worth a candle and the 25 question is, how do we do the best we can, given finite It Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 188 of 197 188 1 resources, and I find that to be candidly challenging. And I 2 think the answer is, I've got to do the best I can with the 3 record I've got in front of me. 4 MR. STERNBERG: Fair enough. 5 I think the record in front of you is one that 6 shows five loans out of a massive population that are in a 7 remittance file. 8 total trial balance that makes sense from two directions. 9 Ms. White testified she plugged one number in and did it with 10 the trial balance figure and then plugged the payment and got 11 it the opposite way. The record in front of you also shows a 12 In the context of a relationship that was fraught 13 with discrepancies, errors, miscalculations, misapplications 14 on the Kabbage side, it would be unfair to the bank to reward 15 that in a sense by this post hoc seeking of a million five 16 when the total trial balance balances out as of today. 17 THE COURT: 18 Mr. Tsekerides? 19 Okay. I understand your position. And let me ask you when you get to the podium to respond to -- 20 MR. TSEKERIDES: 21 THE COURT: Why don't you go first. -- respond to the fair point that -- 22 look, let me say this, as someone who's spent 27 years 23 involved in bankruptcy cases, this isn't the first or last 24 time I've had a case in which the debtors' financial 25 information has been imperfect, okay. That's -- there are -- Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 189 of 197 189 1 that's sort of the nature of the beast. 2 And part of the problem we have is we're all doing 3 the best we can, right. 4 this room got involved, it was what it was, okay. 5 are. 6 By the time, you know, anyone in Here we But the information is imperfect. And how do you respond to the point that, 7 essentially, the debtor arguably is essentially taking 8 advantage of this because it pointed to these particular 9 errors that count against it when it's certainly possible 10 that in the, you know, enormity of the data here, there could 11 very well be countervailing errors. 12 MR. TSEKERIDES: 13 THE COURT: 14 15 Yeah, I understand. It's sort of cherry-picking in a world of imperfections. MR. TSEKERIDES: I understand that's their 16 position and my response to that is it's not cherry-picking. 17 I'll go back to what I said before. 18 remittance file that both parties agreed -- it doesn't have 19 90,000 loans on it; it has a finite number of loans on it -- 20 the parties agreed to use that. 21 There was a file, a When Ms. Williams got Mr. Eidson's file to see 22 what was paid, five of those loans -- she looked, she 23 compared the two lists. 24 specific thing. 25 something on here on this remittance file that we already It wasn't like she was looking for a She looked at the two lists. Oh, there's Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 190 of 197 190 1 paid, okay. 2 And it's important enough to break out. They like 3 to say the Synovus bank account. 4 the Synovus bank account. 5 Synovus bank account is the Synovus bank account. 6 remittance file and the Synovus account -- two different 7 things. 8 The remittance file is not That has other things in it. The So, the So, my response is, Hey, look, we agreed to a 9 process and we agreed to these numbers in terms of the, like, 10 the remittance file. 11 calculation. 12 response is, I'm not pulling one over on you. 13 already. 14 over on you; you're pulling one over on me, is my response. 15 It's in their calculation. In it's our We found out, and they should know. You got paid in October 2020. THE COURT: My You got paid I'm not pulling one And what is your response to the 16 testimony that -- and I understand the evidentiary point, 17 which I'll sort out in connection with resolving this -- but 18 just from a rough justice perspective, what's your response 19 to the point that they say, Look, we got comfortable with 20 this because it kind of all made sense. 21 close to the numbers that we were using at a macro level and 22 what we know for sure is that if we pay you another million 23 and a half dollars, then our -- from our macro analysis, it 24 looks like it's now wrong when it was before right. 25 MR. TSEKERIDES: It came awfully darn Ultimately, your job. My Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 191 of 197 191 1 response to that is, I didn't hear anything that would tell 2 me. Other than a black box, I don't know exactly what they 3 did. Maybe the million five, there's some other numbers in 4 there that are wrong for other reasons, I don't know, but I 5 really don't care. 6 okay. 7 someplace else of 90,000, I don't know what you did. We agreed to a process that had a file, So, the fact that there might be some other loans 8 THE COURT: 9 MR. TSEKERIDES: 10 THE COURT: 11 So, can I ask you about that answer? When I look at the actual contract, right -- 12 MR. TSEKERIDES: 13 THE COURT: 14 Which contract? If you look at the actual agreement and the obligation to pay the settlement amount -- 15 MR. TSEKERIDES: 16 settlement agreement? 17 THE COURT: 18 Yeah. Are we talking about the Yeah, the settlement agreement, I'm sorry. 19 The actual obligation to make -- so in paragraph, 20 I guess it is paragraph -- it's actually paragraph 8, it 21 says: 22 Within three business days following the effective 23 date, CB shall pay KServicing in immediately available funds, 24 an amount equal to the settlement payment. 25 Right? Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 192 of 197 192 1 MR. TSEKERIDES: 2 THE COURT: 3 MR. TSEKERIDES: 4 THE COURT: Okay. Settlement payment is a defined term. Right. And what settlement payment is, is 5 it's the amount of a settlement amount, less the KServicing 6 holdbacks. 7 8 That, itself, is a defined term. MR. TSEKERIDES: It's that box that I showed you earlier. 9 THE COURT: Right, that's got those different 10 components. 11 remittance holdback, which means the amount that constituted 12 the funds collected from borrowers that KServicing is 13 required to remit to Customers Bank under the original 14 agreements. 15 And the relevant issue here is that KServicing's So, nothing in that contract that defines what it 16 was that they were required to pay you is an agreement to 17 follow any particular process to getting to the number. 18 MR. TSEKERIDES: 19 parties followed a process. 20 Exhibit 1, I think it was their Exhibit 1 that showed they 21 took it from the remittance file, right. 22 the process (indiscernible) the borrow of remittances, that 23 is clear 58 million minus these three things. 24 three things is borrower remittances. 25 And what I'm saying is the We have their -- it was They did agree to One of those They used the remittance file that we had -- Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 193 of 197 193 1 THE COURT: But their argument is, We agreed to do 2 it that way because when we looked at what you've done, it 3 all kind of made sense to us and now you're coming back in a 4 way in which it no longer makes any sense to us, so why don't 5 we get to go back and just enforce the agreement, as written? 6 7 MR. TSEKERIDES: Well, where does it say in what they did, they used the trial balance in what they sent us -- 8 THE COURT: Oh, it doesn't. 9 MR. TSEKERIDES: They can't change. I mean, I 10 would say, then they're trying to snooker us by putting one 11 over on us later when they gave us something. 12 And, look, they made a payment of $19 million. 13 know they said they were rushed. 14 next day, they paid 20 or another million. 15 THE COURT: 16 MR. TSEKERIDES: 17 THE COURT: I Well, a few days later, or Oh, I understand that. Okay. I mean, this doesn't give anything 18 away, I'm not overly moved by any of the arguments that hold 19 anyone forever to what they did when they were rushed. 20 Everyone was rushed and was doing the best they can. 21 don't read this agreement to say where, like sometimes you'll 22 do in an arbitration where it's like, Look, this is what 23 we're going to do and we're going to do it quickly and we're 24 going to do our best, and if we get it wrong, too bad, so 25 sad, this is what we've agreed to. I don't read this And I Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 194 of 197 194 1 document that way, so -- 2 3 MR. TSEKERIDES: And the other point I would leave the Court with -- 4 THE COURT: No, go ahead. 5 MR. TSEKERIDES: You know, I wasn't involved in 6 the 9019, but it's not like this was a charity, like counsel 7 said that they funded the case. 8 her $65 million, right, so this wasn't a charitable, you 9 know -- 10 THE COURT: 11 MR. TSEKERIDES: 12 THE COURT: I mean, we thought they owed And, look, we are where we are. Yeah, exactly. These are sophisticated parties. They 13 agreed to this document. They wrote it down and it's on 14 paper, and to me, my job is to read it and enforce it. 15 I'm stuck with, I think, notwithstanding the terrific work 16 everyone has done, look, if this was a dispute over 17 $1.5 billion, instead of $1.5 million, we might have done the 18 accounting and bottomed it out, but I'm not faulting -- 19 again, it's good that you didn't. 20 is, okay, now what do I do when I've got information that is 21 what it is? 22 MR. TSEKERIDES: 23 THE COURT: 24 Okay. 25 And But the question, then, No, you wear the robe. Yeah, so it appears. So, look, this has been very helpful. think I understand where folks are. You've all given me I Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 195 of 197 195 1 things to think about. 2 I'm not going to get it perfect, because I've got what I've 3 got, but what I propose to do is at least give it a little 4 bit of thought and, perhaps, gather folks by Zoom to read 5 something into the record on where I'm landing. 6 propose to do is to do that. 7 8 I don't -- I want to -- I know that What I It appears that your Wednesday afternoon hearing has gone away, so -- 9 MR. TSEKERIDES: 10 THE COURT: That's my understanding. -- why don't we just take that time, 11 that 1 o'clock on Wednesday and I will -- and if there's 12 anyone who can't make it, like, there's no reason why people 13 need to listen to me read. 14 MR. TSEKERIDES: 15 16 I might be able to meet an astronaut that day, so if you don't mind -(Laughter) 17 THE COURT: 18 listening to me read. 19 you all will see what I said. 20 to tell the Court across the street I got it wrong, but I 21 will do my best to get it right and to come on the bench at 22 1 o'clock on Wednesday and give a ruling. 23 24 25 You should do that instead of You know, there'll be a transcript, MR. TSEKERIDES: You'll have every opportunity Great. Very good. Thank you, Your Honor. THE COURT: Thanks to all the counsel. Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 196 of 197 196 1 Is there anything else that I can do to be helpful 2 to the parties while we're here? 3 (No verbal response) 4 THE COURT: 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 adjourned. Okay. If not, thank you all and we're Thank you. (Proceedings concluded at 3:20 p.m.) Case 22-10951-CTG Doc 710 Filed 03/21/23 Page 197 of 197 197 1 CERTIFICATION 2 We certify that the foregoing is a correct 3 transcript from the electronic sound recording of the 4 proceedings in the above-entitled matter to the best of our 5 knowledge and ability. 6 7 /s/ William J. Garling 8 William J. Garling, CET-543 9 Certified Court Transcriptionist 10 For Reliable March 21, 2023 11 12 /s/ Coleen Rand 13 Coleen Rand, CET-341 14 Certified Court Transcriptionist 15 For Reliable March 21, 2023 16 17 /s/ Mary Zajaczkowski 18 Mary Zajaczkowski, CET-531 19 Certified Court Transcriptionist 20 For Reliable 21 22 23 24 25 March 21, 2023
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