KServicing’s Chapter 11 plan of liquidation effective as of June 20

By Sarah Lizee

Olympia, Wash., June 21 – Kabbage, Inc., which does business as KServicing, had its amended joint Chapter 11 plan of liquidation go into effect on Tuesday, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

The plan, which was confirmed on March 15, contemplates an orderly wind down of the company's business and operations under the supervision of the appointed wind-down officer Jeremiah Foster.

Borrowers will receive information about their new servicer as it becomes available. Until then, KServicing will continue servicing its loan portfolio and borrowers.

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, 2022 under Chapter 11 case number 22-10951.

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