Case timeline

1. May 182024
   Status: KServicing reaches $120 million PPP fraud claims settlement

   Kabbage Inc., now KServicing Wind Down Corp., agreed to resolve DOJ allegations tied to its Paycheck Protection Program lending, with the government receiving an allowed, unsubordinated general unsecured claim of up to $120 million and the estate receiving a $12.5 million credit for amounts previously returned to the SBA. Unixcommerce reported the settlement after DOJ allegations that Kabbage inflated PPP loan amounts and submitted fraudulent or suspicious applications.

   The settlement matters because it fixes a major regulatory claim in the post-confirmation wind-down and directly affects recoveries for the unsecured claims pool. KServicing told the bankruptcy court that the Wind Down Officer had “just recently” reached the DOJ agreement resolving two claims, including False Claims Act qui tam claims, while asking to extend the broader claims objection deadline to December 17, 2024 in the claims objection deadline extension motion.

   Sources and provenanceMay 18, 2024