New Challenge to MCA Legality in New York

It’s effectively well settled law, that proper purchases of future receivables are not considered loans in New York State. But a three year-old merchant cash advance case is poised to become center stage for a fresh review of that policy.

At issue is AH Wines Inc., et al. v C6 Capital Funding LLC which the New York Court of Appeals recently agreed to hear. The crux of the plaintiff’s arguments has been that defendant’s purchase of future receivables was actually a usurious loan. The plaintiff was unsuccessful at both the trial court level and appellate level with their case and so appealed to the highest possible court in New York, the Court of Appeals. On February 9, the motion for leave to appeal was granted.