Customers Bancorp in West Reading, Pa., has settled a legal dispute with Kabbage over the Paycheck Protection Program.
The $20.4 billion-asset Customers disclosed in a regulatory filing that its bank will pay $58 million to Kabbage, which has been going through the bankruptcy process. Kabbage had claimed it was owed $65.5 million in fees tied to the PPP.
Kabbage, through its KServicing brand, will “take commercially reasonable efforts” to maintain current levels of PPP servicing to Customers Bank until March 31. Each party also agreed to release the other from any claims or damages.
The settlement still needs to be approved by the U.S. Bankruptcy Court for the District of Delaware, where Kabbage filed its voluntary petition on Oct. 3.
“The bank believes that the agreement represents a fair and reasonable settlement and that it is in the best interests of all parties for the court to approve the agreement,” the filing said. “The final settlement of this matter is not expected to have a material financial impact on the bank’s financial position or operating results.”
Kabbage had claimed that Customers had refused to pay $65.5 million in fees tied to PPP’s second round. Customers had argued that it didn’t have to pay the fees due to alleged lapses in how Kabbage processed PPP loans.