KBRA Comments on Lawsuit Filed by Pagaya Against Klarna

On May 13, 2026, Pagaya Technologies Ltd. (“Pagaya”), together with certain affiliates, filed a lawsuit against Klarna, Inc. (“Klarna”) and Klarna Group plc in the U.S. District Court for the District of Delaware. The lawsuit relates to alleged misappropriation of intellectual property and trade secrets under the Defend Trade Secrets Act of 2016. KBRA maintains ratings on two revolving ABS transactions backed by “buy now, pay later”, point-of-sale consumer loans that were originated or will be originated using Pagaya’s proprietary credit decisioning model through the Klarna platform.

The two revolving ABS transactions are Pagaya Point of Sale Holdings Grantor Trust 2025-1 and Pagaya Point of Sale Holdings Trust 2025-1 (“POSH 2025-1”), and Pagaya Point of Sale Holdings Grantor Trust 2025-2 and Pagaya Point of Sale Holdings Trust 2025-2 (“POSH 2025-2”). In both transactions, Klarna serves as servicer and platform/program administrator for the loans originated through its platform, while Nelnet Servicing, LLC is the backup servicer. The revolving periods of POSH 2025-1 and POSH 2025-2 will end on November 30, 2026 and April 30, 2027, respectively.

KBRA has been notified by Pagaya that it does not currently intend to terminate any servicing agreements with Klarna related to the POSH securitizations. In addition, Klarna has informed KBRA that the lawsuit will not affect its obligations under the servicing agreements with the two transactions, and it will continue servicing the loans so long as it’s engaged as the servicer.

If Pagaya were to stop purchasing loans for any reason prior to the end of the applicable revolving periods, the transactions could enter their amortization periods earlier than scheduled. KBRA’s analysis of revolving transactions considers the performance of the rated tranches during amortization period, and at this time, KBRA does not expect the lawsuit to affect the ratings. KBRA will continue to monitor developments of the lawsuit.

Pagaya is a NASDAQ-listed financial technology company that uses AI-driven credit and analysis technology in the lending marketplace. Klarna is the U.S. operating entity of Klarna Group plc, a global payments and shopping platform that offers buy now, pay later and point-of-sale financing products.