Motion Of Debtors For Leave To File Reply In Support Of

Summary

A motion filed January 17, 2023 as Doc 450 in In re Kabbage, Inc. d/b/a KServicing, et al., Case No. 22-10951 (CTG), jointly administered Chapter 11 cases in the U.S. Bankruptcy Court for the District of Delaware. The debtors ask for leave under Local Rule 9006-1(d) to file a late reply in support of the Disclosure Statement and the Solicitation Procedures Motion, Docket No. 176, ahead of the hearing scheduled for January 19, 2023. The motion states that objections were filed by the U.S. Trustee, the United States of America and Cross River Bank, that objection deadlines were extended, and that the court holiday on January 16, 2023 left the reply deadline of January 13, 2023. It states the responding parties consented to the late filing. The motion is signed by Richards, Layton & Finger, P.A. and Weil, Gotshal & Manges LLP as counsel for the debtors.

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Full text

                   Case 22-10951-CTG             Doc 450         Filed 01/17/23       Page 1 of 6




                               UNITED STATES BANKRUPTCY COURT
                                    DISTRICT OF DELAWARE
------------------------------------------------------------ x
                                                             :
In re                                                        :      Chapter 11
                                                             :
KABBAGE, INC. d/b/a KSERVICING, et al., :                           Case No. 22-10951 (CTG)
                                                             :
                  Debtors.1                                  :      (Jointly Administered)
                                                             :
                                                             :      Re: Docket No. 449
------------------------------------------------------------ x
          MOTION OF DEBTORS FOR LEAVE TO FILE REPLY IN SUPPORT OF
        DISCLOSURE STATEMENT AND SOLICITATION PROCEDURES MOTION

                    Kabbage, Inc. d/b/a KServicing and its debtor affiliates, as debtors and debtors in

possession in the above-captioned chapter 11 cases (collectively, the “Debtors”), respectfully

represent as follows in support of this motion for leave (the “Motion for Leave”):

                                                 Relief Requested

                    1.      By this Motion for Leave, the Debtors seek entry of an order, pursuant to

Rule 9006-1(d) of the Local Rules of Bankruptcy Practice and Procedure of the United States

Bankruptcy Court for the District of Delaware (the “Local Rules”), authorizing the Debtors to

file the reply (the “Reply”), filed contemporaneously herewith, in support of the Disclosure

Statement (as defined herein) and the Solicitation Procedures Motion (as defined herein).

                    2.      A proposed form of order granting the relief requested herein is annexed

hereto as Exhibit A (the “Proposed Order”).



1
    The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification
    number, as applicable are: Kabbage, Inc. d/b/a KServicing (3937); Kabbage Canada Holdings, LLC (N/A);
    Kabbage Asset Securitization LLC (N/A); Kabbage Asset Funding 2017-A LLC (4803); Kabbage Asset Funding
    2019-A LLC (8973); and Kabbage Diameter, LLC (N/A). Kabbage is a trademark of American Express used
    under license; Kabbage, Inc. d/b/a KServicing is not affiliated with American Express. The Debtors’ mailing and
    service address is 925B Peachtree Street NE, Suite 383, Atlanta, GA 30309.



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                                      Jurisdiction and Venue

                   3.    The Court has jurisdiction to consider this matter pursuant to

28 U.S.C. §§ 157 and 1334, and the Amended Standing Order of Reference from the United

States District Court for the District of Delaware, dated February 29, 2012. This is a core

proceeding pursuant to 28 U.S.C. § 157(b). Pursuant to Rule 9013-1(f) of the Local Rules, the

Debtors consent to the entry of a final order by the Court in connection with this Motion for

Leave to the extent it is later determined that the Court, absent consent of the parties, cannot

enter final orders or judgments consistent with Article III of the United States Constitution.

Venue is proper before the Court pursuant to 28 U.S.C. §§ 1408 and 1409.

                                            Background

    A. General Background

                   4.    On October 3, 2022 (the “Petition Date”), the Debtors each commenced

with this Court a voluntary case under chapter 11 of the Bankruptcy Code (the “Chapter 11

Cases”).     The Debtors are authorized to continue to operate their business as debtors in

possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner,

or statutory committee of creditors has been appointed in these Chapter 11 Cases.

                   5.    The Chapter 11 Cases are being jointly administered for procedural

purposes only pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure

(the “Bankruptcy Rules”).

                   6.    Additional information regarding the Debtors’ business, capital structure,

and the circumstances leading to the commencement of these Chapter 11 Cases is set forth in the

Declaration of Deborah Rieger-Paganis in Support of Debtors’ Chapter 11 Petitions and First

Day Relief [Docket No. 13].



                                                  2
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      B. Specific Background

                   7.      On October 3, 2022, the Debtors filed the Joint Chapter 11 Plan of

Liquidation Kabbage, Inc. (d/b/a KServicing) and its Affiliated Debtors [Docket No. 14] (as may

be amended, modified, or supplemented, the “Plan”). On October 5, 2022, the Debtors filed the

Disclosure Statement for the Joint Chapter 11 Plan of Liquidation Kabbage, Inc. (d/b/a

KServicing) and its Affiliated Debtors [Docket No. 63] (as may be amended, modified, or

supplemented, the “Disclosure Statement”).2

                   8.      On October 31, 2022, the Debtors filed the Motion of Debtors for Entry of

Order (I) Approving the Disclosure Statement of the Debtors, (II) Establishing Solicitation,

Voting, and Related Procedures, (III) Scheduling Confirmation Hearing, (IV) Establishing

Notice and Objection Procedures for Confirmation of Plan, (V) Approving Special Electronic

Noticing Procedures, (VI) Approving Debtors’ Proposed Cure Procedures for Unexpired Leases

and Executory Contracts, and (VII) Granting Related Relief [Docket No. 176] (the “Solicitation

Procedures Motion”) seeking, among other things, approval of the Disclosure Statement and

related Plan solicitation procedures.

                   9.      The deadline to object to the adequacy of the Disclosure Statement and

relief requested in the Solicitation Procedures Motion was set for January 6, 2023, at 4:00 p.m.

(prevailing Eastern Time) (the “Objection Deadline”). The hearing to consider approval of the

Disclosure Statement and the Solicitation Procedures Motion is scheduled for January 19, 2023,

at 10:00 a.m. (prevailing Eastern Time) (the “Hearing”).




2
    Amended versions of the Plan, Disclosure Statement, and proposed order approving the Solicitation Procedures
    Motion were filed on December 30, 2022, reflecting negotiations between the Debtors and their key stakeholders.
    See Docket Nos. 395, 396, and 398.


                                                         3
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                   10.   The Objection Deadline was extended for (i) (a) the Office of the United

States Trustee for the District of Delaware (the “U.S. Trustee”), (b) the Federal Reserve Bank of

San Francisco (the “Reserve Bank”), (c) the United States of America on behalf of itself and the

Small Business Administration (the “United States of America”), and (d) Fortis Advisors, LLC,

as the agent of the Target Company Securityholders (as such term is defined in that certain

Agreement and Plan of Merger, dated as of August 16, 2020), as well as certain former directors

and officers of the Debtors in the Kabbage Inc. d/b/a/ KServicing Chapter 11 Cases (“Fortis”),

to 4:00 p.m. (prevailing Eastern Time) on January 11, 2023, and (ii) Cross River Bank (“CRB”

and collectively with the U.S. Trustee, Reserve Bank, the United States of America, and Fortis,

the “Responding Parties”) to 12:00 p.m. (prevailing Eastern Time) on January 12, 2023.

                   11.   The Debtors received certain formal objections to the adequacy of the

Disclosure Statement and the relief requested in the Solicitation Procedures Motion (collectively,

the “Objections”) filed by: (i) the U.S. Trustee [Docket No. 431], (ii) the United States of

America [Docket No. 433], and (iii) CRB [Docket No. 437].

                                    Basis for Relief Requested

                   12.   Pursuant to Local Rule 9006-1(d), “[r]eply papers may be filed and, if

filed, shall be served so as to be received by 4:00 p.m. prevailing Eastern Time the day prior to

the deadline for filing the agenda.” See Del. Bankr. L.R. 9006-1(d). The agenda for the Hearing

was due, and in fact was filed, by 12:00 p.m. (prevailing Eastern Time) on January 17, 2023.

Accordingly, pursuant to Local Rule 9006-1(d), and because of the intervening Court holiday on

January 16, 2023, the deadline to file the reply was 4:00 p.m. (prevailing Eastern Time) on

January 13, 2023 (the “Reply Deadline”). Absent leave of Court, the Debtors will be unable to

file and serve the Reply, and the Court would be denied the opportunity to review the Reply in

advance of the Hearing.

                                                 4
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                   13.   The Debtors submit that sufficient cause exists to grant the relief requested

in this Motion for Leave. The Debtors provided extensions to the Objection Deadline, in part, to

facilitate the potential resolution of certain issues on a consensual basis.           The Debtors’

opportunity to file the Reply should not be foreclosed as a result of the Debtors’ willingness to

give parties additional time to negotiate certain issues in the hopes that a consensual agreement

may be reached. In addition, the Reply will provide the Court with critical information and

arguments to consider when ruling on the Disclosure Statement, and the Court’s consideration of

the Reply will streamline oral argument at the Hearing.

                   14.   Further, due to the intervening Court holiday on January 16, 2023, the

Reply Deadline was only one (1) day after the latest extended Objection Deadline, and the

Debtors were unable to review and sufficiently respond to the Objections prior to the Reply

Deadline. Additionally, the Responding Parties have each consented to the Debtors filing the

Reply on or before January 17, 2022 at 4:00 p.m. (prevailing Eastern Time). Accordingly, the

Debtors submit the relief requested herein is reasonable under the circumstances and should be

approved. Finally, permitting the Debtors to file their Reply on or before January 17, 2022, at

4:00 p.m. does not prejudice any parties in interest, as parties will have an opportunity to review

the Reply in advance of the Hearing rather than learning of the arguments at the Hearing for the

first time.

                                                Notice

                   15.   Notice of this Motion for Leave will be provided to (a) the Office of the

United States Trustee for the District of Delaware; (b) the holders of the 30 largest unsecured

claims against the Debtors on a consolidated basis; (c) the Federal Reserve Bank; (d) Customers

Bank; (e) Cross River Bank; (f) the United States Department of Justice; (g) the Federal Trade

Commission; (h) the Small Business Administration; (i) the Internal Revenue Service; (j) the

                                                   5
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Securities and Exchange Commission; (k) the United States Attorney’s Office for the District of

Delaware; and (l) any party that is entitled to notice pursuant to Bankruptcy Rule 2002

(collectively, the “Notice Parties”). The Debtors believe that no further notice is required.

                   WHEREFORE, for the reasons set forth above, the Debtors respectfully request

entry of the Proposed Order granting the relief requested herein and such other and further relief

as the Court may deem just and appropriate.

Dated: January 17, 2023
       Wilmington, Delaware

                                      /s/ Matthew P. Milana
                                      RICHARDS, LAYTON & FINGER, P.A.
                                      Daniel J. DeFranceschi (No. 2732)
                                      Amanda R. Steele (No. 5530)
                                      Zachary I. Shapiro (No. 5103)
                                      Matthew P. Milana (No. 6681)
                                      One Rodney Square
                                      920 North King Street
                                      Wilmington, Delaware 19801
                                      Telephone: (302) 651-7700
                                      E-mail: defranceschi@rlf.com
                                              steele@rlf.com
                                              shapiro@rlf.com
                                              milana@rlf.com

                                      -and-

                                      WEIL, GOTSHAL & MANGES LLP
                                      Ray C. Schrock, P.C. (admitted pro hac vice)
                                      Candace M. Arthur (admitted pro hac vice)
                                      Natasha S. Hwangpo (admitted pro hac vice)
                                      Chase A. Bentley (admitted pro hac vice)
                                      767 Fifth Avenue
                                      New York, New York 10153
                                      Telephone: (212) 310-8000
                                      E-mail:       ray.schrock@weil.com
                                                    candace.arthur@weil.com
                                                    natasha.hwangpo@weil.com
                                                    chase.bentley@weil.com

                                      Attorneys for Debtors and Debtors in Possession


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