Kabbage (KServicing), a servicer and subservicer of small business Paycheck Protection Program loans (PPP Loans), voluntarily filed for relief and protections under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. KServicing has determined that a Chapter 11 restructuring proceeding provides the company with beneficial flexibility and protections to consummate the winding down of its operations in an efficient and effective manner and will also provide a framework for resolution with key stakeholders and a possible global settlement of outstanding disputes.
The company is focused on minimizing any disruption to its loan servicing obligations to ensure a seamless experience for all borrowers.
“The actions we take today are in line with KServicing’s mission to support PPP borrowers through their loan forgiveness process, provide loan processing services to partner banks, and wind down the Company’s existing loan portfolio,” Laquisha Milner, CEO of KServicing, said. “During the COVID-19 pandemic, the Company was instrumental in originating and servicing PPP loans in partnership with the federal government and bringing the benefits of the PPP to small businesses in underserved communities. We remain committed to providing high-quality service to borrowers and continuing to service PPP loans without interruption to the best of our abilities during this process.”
KServicing has filed a number of customary first day motions with the Bankruptcy Court that, among other things, seek authorization to continue the operations of the company in the ordinary course of business. Further, as a routine matter, the company has sought relief in the Chapter 11 cases to continue paying all active employees in the ordinary course. This relief includes all wages, compensation and other benefits, including healthcare. The company expects to receive court approval for these requests.
The company remains committed to maximizing the value of its business and strongly believes in its ability to effectively and efficiently wind down its operations through Chapter 11, a benefit that will inure to all stakeholders and other parties in interest.
Weil, Gotshal & Manges is acting as the company’s restructuring counsel, Richards Layton & Finger is acting as the company’s co-counsel and AlixPartners is acting as financial advisor, in connection with the Chapter 11 Cases.