KServicing disclosure statement hearing continued to Jan. 19

By Sarah Lizee

Olympia, Wash., Dec. 5 – Kabbage, Inc., which does business as KServicing, had the hearing on approval of the disclosure statement for its Chapter 11 plan moved to Jan. 19, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company has filed a Chapter 11 plan of liquidation that addresses two potential scenarios. In the first scenario, the plan provides for the servicing of the company’s loan portfolio throughout the Chapter 11 cases.

Alternatively, if the debtors are unsuccessful in securing funding through negotiations with the federal reserve and Customers Bank in the early days of the Chapter 11 cases, and thus are unable to service the loan portfolio for the duration of the Chapter 11 cases, the plan provides for (a) the rejection of the servicing agreements with the partner banks, and (b) servicing its PPP liquidity facility portfolio, and on the contemplated plan effective date, the debtors will transfer the PPP liquidity facility collateral to the Federal Reserve in satisfaction of its claims.

Under the plan, holders of administrative expense claims, fee claims, priority tax claims and priority non-tax claims will be paid in full.

Holders of other secured claims will receive payment in full in cash, the collateral securing their claims or other treatment that will render the claims unimpaired.

Holders of general unsecured claims will receive their pro rata share of the general unsecured creditor pool class B claims, or their pro rata share of the general unsecured creditor trust beneficial B interests, depending on if a funded transaction occurs.

Holders of intercompany claims, intercompany interests, subordinated securities claims and equity interests will receive no distributions.

The Atlanta-based servicer and subservicer of small business Paycheck Protection Program loans filed bankruptcy on Oct. 3 under Chapter 11 case number 22-10951.

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