At The Lawyer James, we have clients from all over the world, and when they call our office looking for a New York MCA attorney, it typically means they have been named as a defendant in the state of New York.
There are a substantial number of these types of lawsuits filed daily in New York. For most clients, these are the first time they have been sued and they are unfamiliar with the process generally. They are naturally upset, worried, and do not know what to do. That’s where a New York MCA attorney, at least a good and experienced one, can guide them through the process and let them know what to expect, which effectively and efficiently helps them manage expectations, realistic expectations. Proceeding that way also minimizes surprises, and our clients appreciate that.
Our clients also appreciate the fact that we keep them in the loop, when they want to be kept in the loop. But, not every client wants or needs to be kept in the loop, and in every circumstance we tailor our client updates to client preferences. And our clients seem to appreciate that; it is the feedback we have been getting in any event.
With the MCA financing transactions generally, it is not only helpful but it is necessary if not critical to have an experienced New York MCA attorney on your side. Why? Because not only are we at The Lawyer James familiar with the nuts and bolts of issues involving MCA financing transactions, we are also intimately familiar with the New York State court landscape generally. And it is a bizarre landscape for sure, and this is not our own words. In fact, it was the sentiment of an attorney that we worked with as our adversary in a New York case and she was from out of state. We made a specific move in one of our cases, it was well received by the judge, and this out of state attorney was completely shocked the way we received the result we requested. Again, this attorney was completely out of her mind when she saw the result. She said she had never seen anything like it before and she wanted to resolve the case so she would not be subject to what she referred to as the insanity of the New York court system.
I would not go that far in describing the New York court system at all. I love practicing here. What I would say is that the system provides for a lot of opportunity to those attorneys who know the system well and are experienced navigating through it. And an experienced New York MCA attorney can make a huge difference in your case, peculiarly when that attorney knows how to navigate through the New York court system effectively and efficiently and in a manner that maximizes results.
A lot of times, merchants and businesses and their owners who have been sued in New York in connection with their MCA financing transactions need a New York MCA attorney to help them buy some time. And why do they need some time? Typically these merchants and businesses and their owners need time to improve their cash positions. Sometimes they need thirty to sixty days; other times, they need longer time periods. Usually, we can help them get a little more time for them.
In some circumstances, getting more time makes all the difference in the world. Specifically, during that time period, if the merchant and business and its owner “right the ship,” and get their cash flowing again, and it is a positive cash flow, we can then take that cash flow and work to resolve the outstanding balance with the MCA financing transaction. When we cannot do that, we can still continue litigating the case to see how it resolves. This also can typically allow our clients to have more time.
At the end of the day, even if the merchants or businesses or their individual owners are having a tough time financially, it’s certainly worth having a good attorney on your side.
Some words of caution will be important here. New York law has historically ruled against businesses and merchants and their owners in lawsuits concerning MCA financing transactions. Why? There are several reasons.
First, New York courts enforce contracts that are enforceable, meaning, they have all of the elements that a contract is required to have under New York law, meaning offer, acceptance, consideration, and no defenses. For example, a New York court will not enforce a contract that is illegal, or procured by duress.
Second, New York case law has held that MCA financing transactions are categorized as “receivables purchases” rather than loans, which means that the cost of the MCA financings can be quite high, because the financing charges are not categorized as interest. While there are arguments to the contrary, this is where things stand as of the date of this article.
The main thing to analyze, which the Appellate Division decisions may have overlooked, is the risk associated with the transaction in question. For a customary loan transaction, there is a borrower and a lender. There are also specific repayment terms and certainty of repayment, meaning, the balance is due regardless of an extraneous circumstances (barring fraud by the lender, for interest, or usurious interest rates).
The main reason why courts have found these transactions to be receivables purchased and not loans is because there are receivables tied to the repayment. In a true receivables purchase, if there are no more receivables, or if the company is out of business, the financing advance cannot be repaid, there is no certainty of repayment, and therefore MCA financing transactions are not loans, so the argument goes. But the issue is risk. And MCA financing transactions eliminate their receivables associated risks by adding personal guaranties to the transaction, shifting the risk back to the business owner, or the personal guarantor. The way a creative New York MCA attorney has addressed this issue is to call it a guaranty of performance and not a guaranty of payment. While the law says there’s a distinction, there likely is not a difference, and this should be where the courts should keep there focus and give proper risk association and issue decisions that align with the risk.