Complaint (The Juneau Group, LLC v. Kabbage, Inc. d/b/a KServicing, et al.)

Summary

A Complaint (Document 787) filed pro se by The Juneau Group, LLC as plaintiff against Kabbage, Inc. d/b/a KServicing, et al. and American Express International, Inc., in Case No. 22-10951 (CTG), the jointly administered chapter 11 cases of Kabbage pending in the United States Bankruptcy Court for the District of Delaware. It states that it is brought under FRBP 7001 provisions including determination of removed action and subordination of claim or interest. The background facts allege that Kabbage processed more than $7 billion worth of Paycheck Protection Program loans before its technology and part of its team were acquired by American Express in 2020, leaving KServicing to administer the remaining $1.3 billion portfolio.

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Case 22-10951-CTG Doc 787 _ Filed 04/24/23 Page 1of 4
Page 1 of 4

FILED
SOUTHERN DISTRICT OF INDIANA ._..
BANKRUPTYC COURT: ADVERSARY 2a APR 24 PM 2:19
PROCEEDING K

CLER
U.S: BARKRUPTCY COUR.
x MEST EVP T OF DEL AWARE
Chapter 11
In re :

Case No. 22-10951 (CTG)
KABBAGE, INC. d/b/a KSERVICING, et al.,

(Jointly Administered)

Debtors*.
| : Objection Deadline: April 6", 2023
x
x
x
The Juneau Group, LLC.:
Plaintiff(s)
Vs.
|
| KABBAGE, INC. d/b/a KSERVICING, et al,
| AMERICAN EXPRESS INTERNATIONAL, INC.
Defendant :
| x
x

' 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

RLF1 28271248v.]
Case 22-10951-CTG Doc 787 Filed 04/24/23 Page 2 of 4
Case 22-10951-CTG Page 1 of 4

COMPLAINT

Plaintiff(s) The Juneau Group, LLC, via Pro Se representation, files this Complaint pursuant
to:

FRBP 7001(6) 523(a)(2), 7001(6) 523(a)(4), 7001(1).
FRBP 7001(8) Subordination of Claim or Interest.
FRBP 7001(10) Determination of Removed Action.

Against Debtor, KABBAGE, INC. d/b/a KSERVICING, et al., and alleges the following in
support of requested relict:

JURISDICTION
Venue is proper under 28 U.S.C. 1409.

PARTIES
[1] Debtor Counsel

RICHARDS LAYTON AND FINGER, P.A.
DANIEL J. DEFRANCSCHI

AMANDA R STEELE, ESQ.

ZACHARY IL SHAPIRO ESQ.

MATHEW P MILANA, ESQ.

WEIL, GOTSHAL & MANGES LLP
RAY C. SCHROCK, P.C.

CANDACE M. ARTHUR, ESQ.
NATASHA S. HWANGPO, ESQ.

[2} Claims Agent! OMNI AGENT SOLUTIONS.

[3] Plaintiff; THE JUNEAU GROUP, LLC.

Case 22-10951-CTG Doc 787 Filed 04/24/23 Page 3 of 4
Case 22-10951-CTG Page 2 of 4

BACKGROND FACTS

[1] The Defendant, formerly known as Kabbage, processed more than $7 billion worth of Paycheck
Protection Program (PPP) loans before the company’s “artificial intelligence” technology and a
portion of its team were acquired by American Express in 2020, leaving behind the holding
company, KServicing, to administer the remaining $1.3 billion portfolio of COVID relief loans.

[2] Defendent is using the bankruptcy process to obtain a reprieve from having to constantly defend
against several federal and state investigations into its handling of the loans. In the pandemic,
Defendant delivered more than $7 billion in PPP loans to more than 300,000 borrowers, making it
the second-largest PPP lender in the nation by application volume, the company noted in its
bankruptcy filing.

[3] The Defendant, which is in the process of winding down its operations, is “overburdened” by a
number of disputes regarding its lending practices, requiring the firm to expend significant time and
resources defending itself across “multiple costly fronts,” the filing claims.

[4] In response to these circumstances, Defendant has chosen to rush through bankruptcy process,
in District Court of Delaware in hopes of eliminating the liability of a broader suit targeted at
parent American Express, Inc.

[5] A material class action suit is highly likely to be granted against American Express Inc. The
change of branding and grey area of liability exchange serves as barrier to justice for all class
action participants.

[6] In response to the risk listed above Defendant is issuing millions in legal fees per month for
over-representation to accelerate the reorganization process. All of which materially impact
creditors, and potential class action participants.

[7] Too much responsibility and suboptimal or non-existent technology, results in the
misappropriation of resources. Issues which existed for Defendant during operation prior to
bankruptcy proceedings are now extending into bankruptcy proceedings. All of which point to not
only to Kabbage, Inc. but also American Express International, Inc. The newly formed parent
corporation of the majority of entities within Kabbage, Inc’s previous corporate structure.
Negligence and unwillingness to act responsibly prior, during, and immediately following an
acquisition is materially criminal.

CAUSE(S) OF ACTION

FRBP 7001(6) 523(a)(2), 7001(6) 523(a)(4), 7001(1).
FRBP 7001(8) Subordination of Claim or Interest.
FRBP 7001(10) Determination of Removed Action.

[9] Violation of 14" amendment.

Case 22-10951-CTG Doc 787 _ Filed 04/24/23 Page 4 of 4
Case 22-10951-CTG Page 3 of 4

DEMAND

[10] $1,560,000,000. American Express International, Inc. distributes roughly $1,560,000,000 to
shareholders in dividends annually. A dividend is a stream of cash-flows. Public shareholders are
not responsible for holding C-Suite liability. If executives determine an acquisition is accretive and
strategic a deal is consummated. Financial risk, operational risk, organizational risk, and legal risk
are all evaluated prior to inking a deal. Logically, evidence suggest American Express International
did not “miss” anything. A decision was made in the C-Suite of Kabbage, Inc. and American
Express International. Passing legal and financial liability from 300,000 small business borrowers
of Kabbage Inc. to millions of public shareholders at American Express International in the clout of
“technology” which does not exist.

[11] Judgement for evidence of “technology” at American Express International which was
acquired, within a 24-48-hour period. Code to be published and reviewed by mutually acceptable
third party.

[12] American Express International’s ESG scores rank in the bottom quartile. Executives which
“pass legal and financial liability” in the shroud of “technology” which does not exist is fraud and
should be fired. No risk was passed at all, American Express International’s acquisition of Kabbage
Inc. was a hand-off.

[13] $1,560,000,000 is approximately one-year American Express dividend distribution
(undiscounted). This value is right and just.

[14] Executives of American Express International should be removed immediately or placed on
leave.

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