business owner in New Hampshire struggling with a Merchant Cash Advance
Introduction and Basics:
If you’re a business owner in New Hampshire struggling with a Merchant Cash Advance (MCA), don’t panic! MCA defense lawyers are here to help. Let’s dive into how they can protect your rights and potentially win your case. #MCAlawNH First, what’s an MCA? It’s not a loan, but a purchase of future receivables. This distinction is crucial for legal defenses. #MCAlawNH
Contract Scrutiny and Legal Challenges:
MCA defense lawyers in NH often start by scrutinizing the contract. They look for violations of the NH Consumer Protection Act (RSA 358-A), which prohibits unfair or deceptive practices in commerce. #MCAlawNH One key strategy: challenging the “true nature” of the MCA. If it functions more like a loan, it could be subject to usury laws. NH’s usury law (RSA 336:1) caps interest at 10% unless otherwise agreed in writing. #MCAlawNH In the case of CAN Capital Merchant Services v. Krauss (2019), a NY court ruled that an MCA was actually a loan due to its fixed repayment schedule. NH lawyers might use this precedent. #MCAlawNH NH MCA lawyers often invoke the doctrine of unconscionability (RSA 382-A:2-302). If contract terms are grossly unfair, a court may refuse to enforce them. #MCAlawNH Another strategy: challenging personal guarantees. NH follows the statute of frauds (RSA 506:1), requiring certain agreements to be in writing. Lawyers check if guarantees meet this standard. #MCAlawNH MCA lawyers in NH also scrutinize collection practices. The NH Unfair, Deceptive or Unreasonable Collection Practices Act (RSA 358-C) provides protections against abusive tactics. #MCAlawNH NH MCA lawyers also look at how the advance was marketed. Misrepresentations could violate the NH Unfair Insurance Practices Act (RSA 417), even if the MCA isn’t technically insurance. #MCAlawNH In a landmark case, Yellowstone Capital, LLC v. Central USA Wireless, LLC (2019), a court found that an MCA’s reconciliation provision was a “sham.” NH lawyers might use this to challenge similar provisions. #MCAlawNH MCA defense lawyers in NH also examine whether the provider is properly licensed. Under NH banking laws (RSA 397-A), certain lenders must be licensed. If an MCA is deemed a loan, this could be crucial. #MCAlawNH
Consumer Protection and Unfair Practices:
For example, in NRO Boston, LLC v. Kabbage, Inc. (2019), a MA court found an MCA agreement’s forum selection clause unconscionable. NH lawyers might use similar arguments. #MCAlawNH For instance, if an MCA provider threatens legal action they don’t intend to take, that’s a violation of RSA 358-C:3. MCA lawyers can use this to negotiate or even dismiss cases. #MCAlawNH In Colonial Funding Network v. Epazz, Inc. (2017), a court found that failure to reconcile payments could make an MCA a loan. NH lawyers might use this precedent. #MCAlawNH NH MCA lawyers also examine whether the “true-up” process is fair. If it’s designed to always result in overpayment, it could be challenged as an unfair practice under RSA 358-A. #MCAlawNH NH MCA lawyers also look at whether the provider engaged in “stacking” – providing multiple advances that strain the business. This could be seen as an unfair practice under RSA 358-A. #MCAlawNH In some cases, NH MCA lawyers argue that the business was insolvent when the MCA was provided. This could be grounds for voiding the agreement. #MCAlawNH MCA defense lawyers in NH also examine whether the provider properly disclosed all fees and costs. Failure to do so could violate NH’s Consumer Protection Act (RSA 358-A). #MCAlawNH In Pearl Capital Rivis Ventures v. RDN Constr. (2019), a court found that an MCA’s effective interest rate of 180% was criminal usury. NH lawyers might use this to challenge high-cost MCAs. #MCAlawNH
Jurisdiction and Choice of Law:
NH follows the “choice of law” doctrine. If the MCA contract specifies another state’s laws apply, NH lawyers might challenge this based on NH’s strong public policy (as in Hobin v. Coldwell Banker Residential Affiliates (1996)). #MCAlawNH NH MCA lawyers also look at the “reconciliation” process. If the MCA provider doesn’t adjust payments based on actual receivables, it might violate the agreement’s terms. #MCAlawNH
Reconciliation and Payment Issues:
NH MCA lawyers also look at the “reconciliation” process. If the MCA provider doesn’t adjust payments based on actual receivables, it might violate the agreement’s terms. #MCAlawNH In Colonial Funding Network v. Epazz, Inc. (2017), a court found that failure to reconcile payments could make an MCA a loan. NH lawyers might use this precedent. #MCAlawNH NH MCA lawyers also examine whether the “true-up” process is fair. If it’s designed to always result in overpayment, it could be challenged as an unfair practice under RSA 358-A. #MCAlawNH NH MCA lawyers also look at whether the provider properly calculated and applied payments. Errors here could be grounds for challenging the amount owed. #MCAlawNH Under NH contract law, material breaches by the provider (like miscalculating payments) could excuse the business’s performance. MCA lawyers use this principle in negotiations. #MCAlawNH
Confession of Judgment and Default:
Another strategy: challenging confession of judgment clauses. While legal in NH, they’re subject to strict scrutiny. Lawyers argue they’re unconscionable in MCA contexts. #MCAlawNH In Merchant Funding Services, LLC v. Volunteer Pharmacy Inc. (2019), a NY court voided a confession of judgment in an MCA case. NH lawyers might use this reasoning. #MCAlawNH NH MCA lawyers also look at how default is defined in the contract. If it’s too broad or vague, they might argue it’s unconscionable under RSA 382-A:2-302. #MCAlawNH For example, if “default” includes any change in business practices, lawyers might argue this is unreasonable and unenforceable. #MCAlawNH
Due Diligence and Risk:
MCA defense lawyers in NH also examine whether the provider conducted proper due diligence. If not, they might argue the provider assumed the risk of default. #MCAlawNH In Itria Ventures, LLC v. Panacea Beverage Co. (2020), a court found that an MCA provider’s failure to verify financials was relevant to enforceability. NH lawyers might use similar arguments. #MCAlawNH In some cases, NH MCA lawyers argue that the business was insolvent when the MCA was provided. This could be grounds for voiding the agreement. #MCAlawNH NH follows the Uniform Fraudulent Transfer Act (RSA 545-A). If an MCA was taken when the business was insolvent, it might be voidable under this law. #MCAlawNH
Banking and Financial Regulations:
NH MCA lawyers also look at whether the provider interfered with the business’s banking relationships. This could be grounds for a tortious interference claim. #MCAlawNH In Rapid Capital Finance v. Natures Mkt. (2019), a court found that an MCA provider’s actions constituted tortious interference. NH lawyers might use similar arguments. #MCAlawNH MCA defense lawyers in NH also examine whether the provider made unauthorized ACH withdrawals. This could violate federal law (Electronic Fund Transfer Act) and NH banking regulations. #MCAlawNH NH MCA lawyers also look at whether the provider properly perfected any security interests. Failure to do so could weaken the provider’s position in bankruptcy or other proceedings. #MCAlawNH Under NH’s UCC (RSA 382-A:9-310), security interests must be properly perfected. MCA lawyers check if providers followed these rules. #MCAlawNH
Legal Doctrines and Strategies:
NH follows the “election of remedies” doctrine. If an MCA provider pursues multiple remedies simultaneously, NH lawyers might argue this is impermissible. #MCAlawNH In K9 Bytes, Inc. v. Arch Capital Funding (2019), a court found that pursuing a judgment and keeping a security interest was an impermissible election of remedies. NH lawyers might use this precedent. #MCAlawNH MCA defense lawyers in NH also examine whether the provider engaged in “sham” transactions to evade lending laws. Courts have been increasingly scrutinizing this. #MCAlawNH In Davis v. Richmond Capital Group (2020), a court found that an MCA was structured to evade usury laws. NH lawyers might use similar arguments to challenge MCA structures. #MCAlawNH
Bankruptcy and Final Thoughts:
Finally, NH MCA lawyers always consider bankruptcy as a potential option. While it’s a last resort, it can provide powerful protections under federal law. #MCAlawNH Remember, even if an MCA seems ironclad, skilled NH lawyers can often find ways to challenge it or negotiate better terms. Don’t face an MCA alone – seek professional help! #MCAlawNH