MCA Case One of the Most Notable of the Year for Factoring IndustryApril 17, 2017 | By: Sean Murray
At the 2017 Factoring Conference in Fort Worth, TX, industry attorney and talk radio show host Bob Zadek, cited Merchant Cash & Capital, LLC v G&E Asian American Enterprise., Inc. as one of the most notable legal decisions in 2016.
The contract in question was a purchase of future receivables, i.e. a merchant cash cash advance. A summary of the decision appeared on the Usury Law Blog last year.
During Zadek’s Reports from the Courts session at the conference, he summarized the lessons as follows:
This case is interesting because it appears to confirm that a common contract structure utilized by merchant cash advance companies protects them from usury defenses. When analyzing whether a transaction is usurious, courts look to whether usurious interest is or will be charged to the Borrower from inception of the transaction. Subsequent events do not affect the analysis.
To paraphrase what Zadek also said, the New York Court correctly acknowledged that usury cannot be backwards-looking.
In that case, the MCA company was represented by New York attorney Christopher Murray of Giuliano McDonnell & Perrone, LLPLast modified: April 17, 2017
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.