Reply to Objection of American Express to Joint Motion of Cross — In re Kabbage, Inc. d/b/a KServicing, et al.

Summary

Reply to Objection of American Express to the Joint Motion of Cross River Bank and Customers Bank for an Order Authorizing Rule 2004 Examination, dated March 17, 2023 and filed as Doc 699 in In re Kabbage, Inc. d/b/a KServicing, et al., Case No. 22-10951 (CTG), U.S. Bankruptcy Court for the District of Delaware, for a hearing on March 22, 2023 at 1:00 pm ET. The movants argue that American Express has files they have sought for more than a year, that it had not made firm commitments on the scope or timing of delivery, and that court oversight would help. Cross River says production begun in the past week is incomplete. It offers to withdraw the motion if American Express produces the requested documents by March 31, and the reply is signed by Benesch, Friedlander, Coplan & Aronoff LLP, Quinn Emanuel Urquhart & Sullivan, LLP and other counsel.

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re
KABBAGE, INC. d/b/a KSERVICING, et al.,
Debtors.1
Chapter 11
Case No. 22-10951 (CTG)
(Jointly Administered)
Hearing Date: March 22, 2023, at 1:00 pm ET
Re: Dkt. Nos. 622 & 683
REPLY TO OBJECTION OF AMERICAN EXPRESS TO JOINT MOTION OF CROSS
RIVER BANK AND CUSTOMERS BANK FOR AN ORDER AUTHORIZING RULE
2004 EXAMINATION
Cross River Bank (“Cross River”) and Customers Bank (collectively, the “Movants”) file
this reply to the Objection of American Express to Joint Motion of Cross River Bank and
Customers Bank for an Order Authorizing Rule 2004 Examination [Dkt. No. 683] (“Objection”).2
1.
The Movants just want their files.  It is undisputed that (1) American Express has
these files and (2) the files have not been turned over to the Movants despite more than a year of
efforts.  American Express further does not dispute that access to the files is necessary, not just for
the Movants, but also for the third-party borrowers whose continued loan servicing depends on it,
to say nothing of potential regulatory obligations.  Although American Express now suggests that
it intends to deliver the files to Movants, as of the time of filing this reply it has refused to make
1  The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal
tax identification number, as applicable are: Kabbage, Inc. d/b/a KServicing (3937); Kabbage
Canada Holdings, LLC (N/A); Kabbage Asset Securitization LLC (N/A); Kabbage Asset
Funding 2017-A LLC (4803); Kabbage Asset Funding 2019-A LLC (8973); and Kabbage
Diameter, LLC (N/A) (collectively, the “Debtors”).
2  All terms not defined herein have the meaning given to them in the Joint Motion of Cross River
Bank and Customers Bank for an Order, Pursuant to Section 105(a) of the Bankruptcy Code,
Bankruptcy Rule 2004, and Local Bankruptcy Rule 2004-1, Authorizing and Directing the
Examination of American Express Kabbage Inc. [Dkt. No. 622] (“Motion”).
Case 22-10951-CTG    Doc 699    Filed 03/17/23    Page 1 of 6

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any firm commitments concerning the scope or timing of that delivery.  Given the timeline of the
case and the consistent delays in providing these files—which belong to the Movants—Court
oversight would be useful in resolving the issues and ensuring that the Movants receive their files
consistent with the Debtors’ obligations to deliver.   The Debtors were always just holding these
files in trust for the Movants and the fact that they somehow transferred possession to American
Express, without Movants’ consent, should not prevent the Movants from receiving them before
the Debtors wind down.
2.
Cross River has been demanding its files for years.  At every turn, Cross River has
been met with delay.  In January 2023, Cross River directly asked American Express for the files,
and was told to work through the Debtors to make any requests.  Cross River then urged the
Debtors to demand the files, but documents remain outstanding despite the Debtors’ January 13,
2023 request.  In the interim, the Court confirmed the Debtors’ Plan, and all parties understand
that time is of the essence, including in connection with the transfer of servicing.  American
Express’s failure to produce the documents promptly would harm not just Movants, but also third-
party borrowers whose continued servicing is implicated by the transfer of such information.
3.
American Express does not and cannot dispute that it needs to produce these files.
Indeed, to American Express’ credit, within the last week, it has been cooperating with Cross River
to begin production of the files, however on an initial review those remain incomplete, missing
data, and without explanation regarding some of the data provided.  Moreover American Express
has also refused to make any commitments concerning the terms, scope, or timing of the transfer.
Through counsel, Cross River sent the following email to American Express’ counsel last night in
an effort to resolve the Motion:
Based on conversation yesterday, Cross River’s understanding is that Amex has agreed to
produce the documents requested in the motion.  If that is the case and if American Express
Case 22-10951-CTG    Doc 699    Filed 03/17/23    Page 2 of 6

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can produce those documents by March 31, then Cross River can withdraw from the
motion.
If American Express will produce the documents requested in the motion, but cannot do so
by March 31, we are amenable to adjourning the hearing for a reasonable period of time so
that American Express can make the production.
However, if American Express will not confirm that it will produce the documents
requested in the motion, we intend to move forward with the motion.
Please let us know.
American Express has not responded to that email.
Dated: March 17, 2023
Respectfully submitted,
Wilmington, Delaware
BENESCH, FRIEDLANDER, COPLAN &
ARONOFF LLP
/s/ Gregory W. Werkhehiser
Gregory W. Werkheiser (No. 3553)
1313 N. Market Street, Suite 1201
Wilmington, Delaware 19801
Telephone: (302) 442-7010
Facsimile: (302) 442-7012
gwerkheiser@beneschlaw.com
QUINN EMANUEL URQUHART &
SULLIVAN, LLP
Susheel Kirpalani (admitted pro hac vice)
Isaac Nesser (admitted pro hac vice)
51 Madison Avenue, 22nd Floor
New York, NY 10010
Telephone:  (212) 849-7000
susheelkirpalani@quinnemanuel.com
isaacnesser@quinnemanuel.com
Erika Morabito (admitted pro hac vice)
1300 I Street NW, Suite 900
Washington, D.C. 20005
Telephone: (202) 538-8000
erikamorabito@quinnemanuel.com
Matthew R. Scheck (admitted pro hac vice)
300 West 6th Street, Suite 2010
Austin, TX 78701
Case 22-10951-CTG    Doc 699    Filed 03/17/23    Page 3 of 6

4
Telephone: (737) 667-6100
matthewscheck@quinnemanuel.com
Counsel to Cross River Bank
SULLIVAN HAZELTINE ALLINSON LLP
/s/ William A. Hazeltine
William D. Sullivan (No. 2820)
William A. Hazeltine (No. 3294)
919 N. Market Street, Suite 420
Wilmington, Delaware 19801
Telephone: (302) 428-8191
Facsimile: (302) 428-8195
whazeltine@sha-llc.com
HOLLAND & KNIGHT LLP
John J. Monaghan (admitted pro hac vice)
Jeremy M. Sternberg (admitted pro hac vice)
Lynne B. Xerras
10 St. James Avenue
Boston, MA 02116
Telephone: 617-523-2700
Facsimile: 617-523-685
john.monaghan@hklaw.com
jeremy.sternberg@hkaw.com
lynne.xerras@hklaw.com
Counsel to Customers Bank
Case 22-10951-CTG    Doc 699    Filed 03/17/23    Page 4 of 6

CERTIFICATE OF SERVICE
I, Gregory W. Werkheiser, hereby certify that on March 17, 2023, the prefixed
document was served via CM/ECF on all parties registered to receive notices in this case and on
the parties listed below via email:
Rosa Sierra-Fox
Office of the United States Trustee
U. S. Department of Justice
844 King Street, Suite 2207
Lockbox #35
Wilmington, DE 19801
rosa.sierra@usdoj.gov
William A. Hazeltine, Esq.
SULLIVAN HAZELTINE ALLINSON LLC
919 North Market Street
Suite 420
Wilmington, DE 19801
whazeltine@sha-llc.com
Ray C. Schrock, Esq.
Candace Arthur, Esq.
Natasha S. Hwangpo, Esq.
Chase Bentley, Esq.
WEIL, GOTSHAL & MANGES, LLP
767 Fifth Avenue
New York, NY 10153-0119
ray.schrock@weil.com
candace.arthur@weil.com
natasha.hwangpo@weil.com
chase.bentley@weil.com
Amanda R. Steele, Esq.
Zachary I. Shapiro, Esq.
Matthew P. Milana, Esq.
Daniel J. DeFranceschi, Esq.
RICHARDS, LAYTON AND FINGER
920 N. King Street
Wilmington, DE 19801
steele@rlf.com
Shapiro@rlf.com
milana@rlf.com
defranceschi@rlf.com
John J. Monaghan, Esq.
Jeremy M. Sternberg, Esq.
Lynne B. Xerras
HOLLAND & KNIGHT LLP
10 St. James Avenue, 11th Floor
Boston, MA 02116
john.monaghan@hklaw.com
jeremy.sternberg@hklaw.com
lynn.xerras@hklaw.com
Derek C. Abbott, Esq.
Jonathan M. Weyand, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL
LLP
1201 North Market Street
16th Floor
Wilmington, DE 19801
dabbott@morrisnichols.com
jweyand@morrisnichols.com
James L. Bromley, Esq.
SULLIVAN & CROMWELL LLP
125 Broad Street
New York, NY 10004-2498
bromleyj@sullcrom.com
Amanda Flug Davidoff, Esq.
SULLIVAN & CROMWELL LLP
1700 New York Avenue, N.W.Suite 700
Washington, DC 20006-5215
davidoffa@sullcrom.com
[Signature block on following page.]
Case 22-10951-CTG    Doc 699    Filed 03/17/23    Page 5 of 6

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Dated: March 17, 2023
BENESCH, FRIEDLANDER, COPLAN &
ARONOFF LLP
/s/ Gregory W. Werkheiser
Gregory W. Werkheiser (No. 3553)
1313 N. Market Street, Suite 1201
Wilmington, Delaware 19801
Telephone: (302) 442-7010
Facsimile: (302) 442-7012
gwerkheiser@beneschlaw.com
-and-
QUINN EMANUEL URQUHART &
SULLIVAN, LLP
Susheel Kirpalani (admitted pro hac vice)
Isaac Nesser (admitted pro hac vice)
51 Madison Avenue, 22nd Floor
New York, NY 10010
Telephone:  (212) 849-7000
susheelkirpalani@quinnemanuel.com
isaacnesser@quinnemanuel.com
Erika Morabito (admitted pro hac vice)
1300 I Street NW, Suite 900
Washington, D.C. 20005
Telephone: (202) 538-8000
erikamorabito@quinnemanuel.com
Matthew R. Scheck (admitted pro hac vice)
300 West 6th Street, Suite 2010
Austin, TX 78701
Telephone: (737) 667-6100
matthewscheck@quinnemanuel.com
Counsel to Cross River Bank
Case 22-10951-CTG    Doc 699    Filed 03/17/23    Page 6 of 6

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