How to Vacate an MCA Judgment in the Bronx: A Step-by-Step Legal Guide

If an MCA judgment has been entered against your Bronx business, the first step is to find out where the judgment was entered and how it was obtained.

Many MCA agreements contain New York County venue provisions, which can result in a case or judgment being filed in Manhattan even when the business operates in the Bronx.

The grounds and procedure for challenging the judgment depend on whether it was entered by default, through a confession of judgment, or under another procedure. Possible defenses may involve lack of notice, improper service, problems with the judgment paperwork, or defenses to the MCA agreement itself.

If your bank account has already been frozen, timing matters. Call (917) 905-8280 today.

What Is an MCA Judgment and Why Does It Matter for Bronx Business Owners?

An MCA judgment gives a funder a legal basis to pursue collection against a business. Depending on the judgment and the enforcement steps being taken, that can include restraining bank accounts, pursuing receivables, or taking other collection action.

For a Bronx business owner, the first sign of a judgment may be a frozen operating account or a notice from the bank. By that point, the funder may already have started enforcement.

Understanding merchant cash advance defense starts with figuring out what happened before the judgment was entered, what the MCA agreement actually required, and what defenses may still be available.

A merchant cash advance (MCA) is generally written as a purchase of future receivables rather than a traditional loan. But the name on the agreement does not necessarily answer every legal question. How the transaction actually worked can matter.

If the funder took fixed ACH withdrawals regardless of the business’s actual receivables, did not provide a meaningful way to reconcile payments, or otherwise required repayment in a way that looked more like fixed debt, those facts may become important when evaluating the agreement and the defenses available.

Confession of Judgment (COJ) vs. Default Judgment: Key Differences

A confession of judgment (COJ) and a default judgment are not the same thing, and the way you challenge them can be different.

A COJ involves written authority that allows judgment to be entered without the ordinary process of litigating a lawsuit through trial. Whether a particular confession of judgment is enforceable depends on the documents, the parties, and whether the statutory requirements were followed.

A default judgment usually follows when a lawsuit is filed, and the defendant does not respond in time. If the business was never properly served, did not receive notice, or has another legally sufficient reason for the default, there may be grounds to ask the court to reopen the case.

The first question is therefore not simply, “Can this judgment be vacated?” It is, “How was this judgment entered?”

That answer determines what to challenge and what evidence the business will need.

Why MCA Funders May File in Manhattan Even When Your Business Is in the Bronx

A Bronx address does not necessarily mean the MCA case was filed in Bronx County.

MCA agreements may include forum selection or venue provisions that identify New York County as the place where disputes will be handled. That means a Bronx restaurant, contractor, medical practice, retailer, or other business may discover that the case against it is actually pending in Manhattan

Before filing anything, confirm the court, county, case number, judgment date, and the procedure used to obtain the judgment.

This matters because a motion challenging the judgment generally needs to be brought before the court that entered it. Filing papers in the wrong place can cost valuable time when a bank restraint or other collection action is already affecting the business.

New York also changed the rules governing confessions of judgment in 2019. Those changes restricted the use of New York confessions of judgment against certain out-of-state debtors. Still, they did not eliminate every confession of judgment involving a New York business.

What Happens the Moment a Judgment Is Entered Against You

Once a funder has a judgment, the situation can move quickly.

A business may discover that its bank account has been restrained, making it difficult to cover payroll, rent, vendors, taxes, or ordinary operating expenses. Other collection efforts may follow depending on the judgment and the funder’s enforcement strategy.

A UCC financing statement may also be connected to the MCA transaction. A UCC filing and a court judgment are different legal issues, so resolving one does not necessarily resolve the other.

For many business owners, the bank freeze is the moment they realize how far the case has already progressed.

That is why the first response should be practical. Get the judgment. Get the MCA agreement. Confirm where the case was filed. Find out what enforcement action has already been taken. Then determine what you can challenge and what needs immediate attention.

Can You Vacate an MCA Judgment in New York? The Legal Standard

Yes, an MCA judgment may be challenged in New York, but the grounds depend on how the judgment was entered and what happened before and after the case was filed.

For a default judgment, the court may look at why the business did not respond and whether it has a defense to the underlying claim. A confession of judgment raises different questions, including whether the required procedures were followed and whether there are grounds to challenge the judgment or the MCA agreement itself.

The important thing is to act quickly and understand exactly what you are dealing with before filing anything.

Fighting a confession of judgment in New York can involve several issues, from the judgment paperwork to the terms of the MCA agreement and how the funder collected payments. For Bronx business owners, the immediate concern is often what to do when the judgment has already led to a bank restraint or other collection action.

The Two-Part Test: Reasonable Excuse + Meritorious Defense

When a business is asking a court to vacate a default judgment based on excusable default, two questions are especially important: Why did the business default, and does it have a potentially valid defense to the claim?

The first part addresses why the business did not respond. Depending on the facts, that may involve lack of notice, service problems, confusion about the lawsuit, or other circumstances that explain why no response was filed.

The second part looks at the underlying case. The business generally needs to show that it has a defense worth hearing. In an MCA dispute, that may involve the terms of the agreement, how payments were collected, whether reconciliation actually worked, how the funder declared a default, or other facts that could affect the funder’s claim.

You do not want to wait until you are preparing the motion to start looking for those facts. The MCA agreement, payment history, bank records, communications with the funder, court papers, and service documents can all matter.

CPLR § 5015: The Statute That Governs Vacatur in New York

CPLR § 5015 provides several grounds for asking a New York court to relieve a party from a judgment or order. Depending on the case, those grounds can include excusable default, newly discovered evidence, fraud or misrepresentation, and lack of jurisdiction.

Which ground applies depends on what actually happened.

If the business was sued but never properly served, the issue is different from a case where service occurred, and the business failed to respond. A judgment obtained through alleged fraud or misrepresentation raises another set of questions. A confession of judgment also depends on the procedure used to enter it.

Timing depends on the specific ground asserted and the case's procedural history. That is one reason a business owner should not assume a universal deadline for every MCA judgment challenge.

If you discover a judgment or bank restraint, get the court papers and have them reviewed as soon as possible.

How the 2019 CPLR § 3218 Reform Changed COJ Enforcement

New York changed CPLR § 3218 in 2019 to restrict where certain confessions of judgment can be filed.

For MCA disputes, that change matters because confessions of judgment had been used against businesses located well outside New York. The amendment narrowed that practice by changing the rules for where a confession of judgment may be entered.

For a Bronx business owner, however, the existence of the 2019 amendment does not by itself mean a confession of judgment is invalid.

The actual filing still needs to be reviewed. Who signed it? Where did the debtor reside when it was signed? Where was the judgment entered? Did the papers satisfy the requirements that applied to that filing?

Those questions matter when determining whether there is a basis to challenge the judgment.

The Yellowstone Capital Settlement and What It Means for MCA Cases

Government enforcement against MCA companies has also changed the environment surrounding these disputes.

For a business dealing with an MCA judgment, the practical question is whether its funder, related company, or collection operation has been affected by an enforcement action and whether that action has any direct bearing on the business’s judgment, UCC filing, or collection activity.

That needs to be checked on a case-by-case basis.

More broadly, enforcement involving MCA companies is another reason not to assume that a judgment means every part of the funder’s claim is beyond challenge. The agreement, payment structure, collection history, court filings, and the parties' conduct still need to be reviewed on their own facts.

A Bronx business owner facing a frozen account should focus first on the documents in front of them. Find the judgment. Identify the funder. Pull the MCA agreement and payment history. Determine how the judgment was entered. Then review the defenses and procedural options that fit the case.

Grounds to Vacate: Your Strongest Defenses Against an MCA Judgment

The right defense depends on the MCA agreement, how the funder collected payments, and how the court entered the judgment. In some cases, the issue is procedural. In others, the business may have defenses to the MCA claim itself.

Potential defenses include criminal usury if the transaction is first determined to be a loan, reconciliation issues, defects in the confession of judgment, fraud, or unconscionability. The facts matter, and no single defense applies to every MCA agreement or judgment.

Criminal Usury Defense: New York Penal Law § 190.40

Criminal usury can become an issue in an MCA case, but one question comes first: Was the transaction actually a loan?

MCA agreements are generally written as purchases of future receivables. New York courts can look beyond that label and examine how the transaction worked in practice. If the funder was entitled to repayment no matter what happened to the business’s receivables, that can support an argument that the transaction functioned more like a loan.

The payment structure is only part of that review. Courts may also look at whether the agreement provided a meaningful reconciliation process, whether the term was truly indefinite, and whether the funder assumed a real risk that it might not be repaid.

If the transaction is determined to be a loan, New York’s usury laws may then become relevant. Penal Law § 190.40 addresses criminal usury at rates exceeding 25 percent per year. But a high factor rate or effective annual cost alone does not automatically turn an MCA into a usurious loan. Courts must first evaluate the transaction under the legal standards that distinguish a receivables purchase from a loan.

That distinction is a major part of MCA lawsuit defense in New York. Contract language matters, but so does what happened after the agreement was signed.

Failure to Reconcile: When Fixed ACH Debits May Point to a Loan

Reconciliation is one of the first provisions to look at in an MCA agreement.

If the transaction is a purchase of future receivables, payments should generally relate to the receivables the business generates. Many MCA agreements include a reconciliation provision that allows the merchant to request an adjustment when revenue changes.

The question is whether that provision worked in practice.

If revenue dropped but the funder continued taking the same fixed ACH amount, look at what happened when the business asked for an adjustment. Was there a real process for changing the payment? Was the request considered? Was reconciliation available in practice, or only written into the contract?

Those facts can matter when a court decides whether the funder actually assumed the risk of purchasing future receivables or whether repayment was effectively fixed.

Procedural Defects in the Confession of Judgment Filing

A confession of judgment has to satisfy New York’s procedural requirements. If the required documents were incomplete, inaccurate, improperly executed, or filed in a way that did not comply with the law, those problems may provide grounds to challenge the judgment.

This is why the actual court file matters.

Do not rely only on the MCA agreement or what the funder says happened. Obtain the confession of judgment, supporting affidavit, entered judgment, and related filing documents. Check who signed them, what amount was stated, where the judgment was filed, and whether the paperwork matches the underlying agreement.

A procedural challenge is different from arguing that the MCA itself was invalid. Depending on the case, you may need to address both issues.

Fraud in the Inducement and Unconscionability Claims

The circumstances surrounding the MCA agreement may also matter.

If the business was given false information about material terms of the transaction, including how payments would work, when a default could be declared, or whether reconciliation would actually be available, those facts should be reviewed when evaluating possible defenses.

Unconscionability is another possible argument, but difficult contract terms alone do not automatically make an agreement unconscionable. Courts look at the circumstances surrounding the transaction and the substance of the terms themselves.

The better approach is to work from the documents and the payment history. Compare what the agreement said would happen with what the funder actually did.

Personal Guarantee Challenges

A judgment against the business and liability under a personal guarantee are related issues, but they are not necessarily the same issue.

Many MCA agreements require the owner to sign a personal guarantee. If the business judgment is challenged or vacated, the guarantee does not automatically disappear. You need to review the guarantee itself, along with the underlying MCA agreement and the claims asserted against the owner.

Questions may include what the guarantee covers, what triggers liability, whether the funder complied with the underlying agreement, and whether defenses to the MCA transaction affect the claims against the guarantor.

For a business owner who signed personally, address personal liability for an MCA agreement as part of the overall defense strategy, not after the business judgment has already been handled.

The Vacatur Process: Step by Step for Bronx Business Owners

If an MCA judgment has already been entered against your Bronx business, start by finding out exactly what happened. You need to know which court entered the judgment, how it was obtained, whether your accounts have been restrained, and whether there are UCC filings connected to the MCA.

You may need to address some issues at the same time, especially if a bank account is already frozen. The right approach depends on the judgment, the court record, and what enforcement action the funder has already taken.

Step 1: Identify the Court and Judgment Type

Get a copy of the judgment and the court file. Confirm which court entered it and whether it was entered by default, through a confession of judgment, or under another procedure.

Do not assume that a Bronx business means the case is in Bronx County. Check the MCA agreement for venue provisions and confirm the actual court before preparing a motion.

Also pull the underlying MCA agreement and check for any UCC financing statements connected to the transaction. At this point, the goal is to get the full picture of what the funder has already done and what needs to be addressed.

Step 2: Act Immediately

Once you learn that a judgment has been entered, do not put off dealing with it.

The deadline to challenge a judgment depends on the type of judgment, the grounds for vacatur, and the case's procedural history. Some grounds under CPLR § 5015 have specific timing requirements, while other challenges may be governed by different rules.

That is why treating every MCA judgment as having the same 30-day deadline can be misleading.

The practical point is simpler. If you discover a judgment because your operating account has been frozen, start gathering the court papers immediately. Waiting can make it harder to challenge the judgment and may allow collection efforts to continue while the business is trying to operate.

Step 3: File the Motion to Vacate in the Correct Court

Once you review the judgment and court file, the motion must address the grounds that apply to the case.

Depending on the circumstances, the papers may include an attorney affirmation, an affidavit from the business owner, supporting exhibits, legal arguments explaining why the judgment should be vacated, and a proposed order to show cause if immediate court intervention is needed.

The supporting documents matter. If the argument involves improper service, lack of notice, reconciliation, the funder’s collection practices, or another defense to the MCA claim, the motion should be supported by the records that show what actually happened.

The motion generally needs to be brought before the court that entered the judgment. Confirming that court at the beginning avoids losing time filing in the wrong place.

Step 4: Move to Address Bank Restraints and ACH Collection

If the business’s bank account is already restrained, the judgment itself may not be the only issue that needs immediate attention.

Depending on the facts, an attorney may ask the court for temporary relief while the motion to vacate is pending. That can involve an order to show cause and a request for a temporary restraining order addressing collection activity.

Emergency relief is not automatic. The court will look at the circumstances and the legal basis for the request.

For the business owner, the immediate concern is usually keeping the company operating. A frozen account can quickly affect payroll, rent, vendors, taxes, and other expenses. That is why the judgment challenge and the bank restraint often need to be evaluated together, not one after the other.

Step 5: Address the UCC-1 Filing Separately

Vacating a judgment does not necessarily remove a UCC-1 financing statement connected to the MCA.

These are separate issues.

A UCC-1 is a public financing statement that may identify the funder as a secured party with an asserted interest in certain business assets. Whether that filing should remain in place depends on the underlying agreement, the obligation's status, and how the MCA dispute is ultimately resolved.

If the case is settled or the funder’s secured interest is otherwise terminated, the UCC filing should be addressed as part of that resolution. Do not assume that winning a motion to vacate automatically clears the financing statement from the public record.

For a business trying to obtain new financing, sell assets, or move forward after an MCA dispute, leaving the UCC issue unresolved can create another problem even after the judgment has been addressed.

Step 6: Investigate Your Funder’s Regulatory History

You should also review the funder itself.

Look at the company named in the MCA agreement, any related entities involved in collection, and the party that obtained the judgment. If the funder or a related company has been subject to a government enforcement action, settlement, or court order, determine whether that history has any direct bearing on your case.

Do not assume that an enforcement action involving one MCA company automatically applies to another. The connection needs to be established.

But if your funder is directly covered by an order affecting judgments, collection practices, or UCC filings, that information may become important when deciding how to challenge the judgment or approach a resolution.

The goal throughout this process is to work from the actual documents. The judgment, court file, MCA agreement, payment history, bank restraint, UCC filings, and funder’s collection history should tell you what happened and where the strongest issues may be.

Three Mistakes That Kill an Otherwise Viable Vacatur Motion

• Filing in the wrong court. Do not assume that because your business is in the Bronx, the judgment was entered in Bronx County. MCA agreements may contain venue provisions that place the case in New York County. Before filing a motion, get a copy of the judgment and confirm exactly which court entered it. Filing in the wrong court costs time, especially when a bank account is already frozen.

• Waiting after you learn about the judgment. If you discover the judgment because your bank account was restrained, act immediately. The deadline for challenging a judgment depends on how it was entered and the grounds for vacatur, but waiting can make the situation harder. Get the court papers, MCA agreement, and enforcement documents together as soon as you know there is a problem.

• Treating vacatur as the finish line. Vacating a judgment does not necessarily end the MCA dispute. It may reopen the underlying claim and allow the business to defend the case. The UCC filing, personal guarantee, underlying MCA balance, and any other collection issues may still need to be addressed. The goal should be to deal with the entire MCA problem, not just the judgment.

MCA Judgment Enforcement in the Bronx: What to Expect

Once an MCA funder has a judgment, collection can move quickly. For a Bronx business owner, a bank restraint may be the first sign that a judgment has already been entered.

At that point, the immediate question is what the funder has done and what may happen next. Pull the judgment, check the court docket, review the bank restraint, and find out whether there are UCC filings or other collection efforts connected to the MCA.

Bank Account Freezes and Restraining Notices

A restraining notice can prevent a business from accessing funds in its bank account while the judgment is being enforced.

For an operating business, that can create an immediate problem. Payroll, rent, vendor payments, taxes, and other expenses may still be due even though the company cannot freely use the money in the account.

The bank generally cannot simply disregard a valid restraining notice because the business disputes the MCA. The judgment and the restraint need to be addressed through the proper legal process.

If you first learn about an MCA judgment when a transaction is declined, or your account is frozen, do not assume the bank can solve the problem. Find out who obtained the judgment, where it was entered, and what enforcement papers were served.

UCC Liens Filed with the NY Department of State

MCA agreements may also involve a UCC-1 financing statement filed against certain business assets.

A UCC filing is different from a judgment. It is a public financing statement associated with an asserted security interest under the underlying transaction. That distinction matters because dealing with the judgment does not necessarily resolve the UCC filing.

An outstanding UCC filing can also arise when the business applies for financing, sells assets, or enters another transaction that triggers a lien search.

If the MCA dispute is resolved, make sure you address the UCC filing as part of that resolution. Do not assume it disappears simply because the judgment has been vacated or the lawsuit has been settled.

Enforcement in Other States (Florida, Maryland, Virginia, DC)

A New York judgment can create problems outside New York when a funder attempts to enforce it in another state where the business or guarantor has assets.

The procedure depends on the state involved. A business with operations, bank accounts, property, or other assets outside New York should therefore find out whether the funder has taken steps to enforce the judgment elsewhere.

The New York judgment remains the priority. If the judgment is being challenged in the court that entered it, review any related enforcement in another jurisdiction at the same time.

Bronx business owners facing this type of collection problem may be dealing with more than one issue at once. Similar questions can arise for businesses elsewhere in New York City, including those evaluating MCA defense strategies for Queens small businesses.

What Happens If You Ignore the Judgment

Ignoring an MCA judgment gives the funder more time to pursue collection.

Depending on the judgment and the agreements involved, that may include continued efforts against business accounts, receivables, or other assets. If the owner signed a personal guarantee, the funder may also pursue claims against the guarantor where the agreement and judgment permit it.

The longer the judgment remains unresolved, the harder it may become for the business to deal with the financial pressure created by enforcement.

If you are trying to understand what happens after an MCA default, start with what has already happened in your own case. Check the judgment, bank restraints, UCC filings, personal guarantee, and any other collection papers you have received.

Once you know what the funder has already done, you can decide what needs immediate attention and what needs to be addressed as part of the larger MCA dispute.

Why Work With J. Singer Law Group to Vacate Your Bronx MCA Judgment

J. Singer Law Group represents Bronx and New York City business owners dealing with MCA judgments, frozen accounts, UCC filings, personal guarantees, and the underlying MCA debt.

When a judgment has already been entered, the immediate problem may be the bank restraint. But that is rarely the only issue. The business still needs to understand why the judgment was entered, what defenses may be available, and what happens to the MCA obligation if the judgment is vacated.

That is where the larger strategy matters.

Our MCA Defense Practice: What We Do

J. Singer Law Group handles MCA disputes together with commercial litigation and business restructuring matters. That allows the firm to look beyond the motion before the court.

Managing Partner Jeb Singer previously served as a law clerk to Hon. Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York. Ira Reid previously clerked for Hon. Cecelia H. Goetz of the U.S. Bankruptcy Court for the Eastern District of New York and spent approximately 20 years as a restructuring partner at Baker McKenzie before joining the firm.

That restructuring experience can matter when an MCA judgment is only one part of a larger financial problem.

A business may need to challenge the judgment while also dealing with the underlying MCA balance, other funders, personal guarantees, UCC filings, or broader creditor pressure. Depending on the situation, the next step may involve litigation, negotiation, MCA restructuring, or a business bankruptcy option such as Chapter 11 bankruptcy for small businesses.

The right path depends on the business, its debt, and whether the numbers still work.

Serving the Bronx, Manhattan, Brooklyn, Queens, and Long Island

J. Singer Law Group’s office is located at 1 Liberty Street, Suite 2327, New York, NY 10006, in Manhattan’s Financial District.

The firm represents business owners in the Bronx and throughout New York City, including Manhattan, Brooklyn, and Queens, as well as Long Island and Westchester.

For a Bronx business dealing with an MCA case in New York County Supreme Court, the first step is to confirm where the case was filed, what judgment was entered, and what collection activity has already started.

From Vacatur to Full MCA Resolution: Restructuring, Settlement, and Bankruptcy Options

Vacating the judgment may allow the business to defend the underlying MCA claim, but it does not necessarily end the dispute.

The next question is what makes sense for the business.

In some cases, that may mean continuing to litigate the funder’s claim. In others, the parties may negotiate a settlement or restructuring. A business may also need to look at refinancing or other ways to replace expensive MCA obligations with a payment structure it can manage.

For owners trying to understand how to get out of MCA debt in New York, the answer should start with the entire financial picture, not one MCA agreement in isolation.

How many MCA positions does the business have? What are the daily or weekly withdrawals? Are accounts already restrained? Did the owner sign personal guarantees? Are other creditors also demanding payment? Most importantly, can the business operate if the MCA pressure is reduced?

If the business faces multiple MCA obligations or broader creditor problems, bankruptcy may also be an option. Depending on eligibility and the facts of the case, Subchapter V or another Chapter 11 strategy may help address business debts through a court-supervised restructuring.

Bankruptcy is not always the answer. Settlement is not always the answer. And vacating the judgment is not always the end of the problem.

The goal is to understand what the business is dealing with and choose the path that gives it the best chance to move forward.

Frequently Asked Questions

Can I vacate an MCA judgment that was filed in Manhattan even though my business is in the Bronx?

Potentially, yes. Your business being in the Bronx does not necessarily mean the MCA case was filed there. MCA agreements may contain venue provisions that place a dispute in New York County, which means a judgment involving a Bronx business may have been entered in Manhattan.

Start by getting a copy of the judgment and confirming which court entered it. A motion challenging the judgment generally needs to be brought before that court. Do not assume the county based on your business address.

Once you know where the judgment was entered and how it was obtained, an attorney can determine what grounds may be available to challenge it.

How long do I have to vacate an MCA default judgment in New York?

There is not one 30-day deadline that applies to every MCA judgment.

The timing depends on how the judgment was entered, the grounds you use to challenge it, and the case's procedural history. Different grounds for vacatur have different requirements, so the court papers must be reviewed before determining which deadline applies.

The practical answer is to act as soon as you learn about the judgment. If a frozen bank account is the first sign that something happened, treat that as a reason to get the judgment and court file immediately. Waiting can make the challenge more difficult and gives the funder more time to continue collection efforts.

My Bronx business bank account was frozen this morning. What should I do?

First, find out who froze the account and what judgment or court process is behind the restraint.

Get a copy of the restraining notice from the bank if possible. Then locate the judgment, court case, and MCA agreement. You need to know which court entered the judgment, how it was entered, and what collection action has already been taken.

Do not assume the bank can release the funds because you dispute the MCA. If the restraint is based on a judgment, court action may be necessary to challenge the judgment or seek relief from the restraint.

Depending on the facts, an attorney may be able to seek emergency relief while challenging the underlying judgment. Whether that relief is available depends on the case and the court, so you should review the documents as soon as possible.

What defenses can I raise to fight the underlying MCA claim after vacatur?

The available defenses depend on the MCA agreement and how the transaction actually worked.

One important question is whether the MCA was a true purchase of future receivables or functioned more like a loan. Courts may look at factors such as whether reconciliation was meaningful, whether repayment was truly contingent on receivables, and whether the funder assumed a real risk of nonpayment.

If the transaction is determined to be a loan, New York’s usury laws may become relevant. Other possible defenses may involve reconciliation issues, procedural defects in a confession of judgment, fraud, or unconscionability, depending on the facts.

Payment history can be as important as the contract. Look at what the agreement required, what the funder actually collected, what happened when revenue changed, and how the funder responded to any request for reconciliation.

Does the Yellowstone Capital settlement help my MCA case?

It depends on the funder and the facts of your case.

If your funder or a related company was directly affected by a government enforcement action, settlement, or court order, that history should be reviewed to determine whether it has any effect on your judgment, UCC filing, or collection activity.

An enforcement action involving another MCA company does not automatically create a defense in your case. The connection has to be established.

That is why you should start with the company named in your MCA agreement, the party that obtained the judgment, and any related entities involved in collecting the debt. From there, you can determine whether there is regulatory or litigation history that matters to your dispute.

What happens to the UCC lien on my business if the MCA judgment is vacated?

Vacating the judgment does not necessarily remove a UCC-1 financing statement.

The judgment and the UCC filing are separate issues. A UCC-1 is a public financing statement associated with an asserted security interest in business assets. Whether it should remain in place depends on the MCA agreement, the status of the underlying obligation, and how the dispute is ultimately resolved.

If the MCA is settled, restructured, or otherwise resolved in a way that requires the funder’s secured interest to be terminated, the UCC filing should be dealt with as part of that resolution.

Do not leave it for later. An unresolved UCC filing can keep coming up when the business applies for financing, sells assets, or enters another transaction that requires a lien search.

The judgment, bank restraint, personal guarantee, underlying MCA claim, and UCC filing should be reviewed together. Vacating the judgment may be an important first step, but the bigger goal is to resolve the MCA problem in a way that lets the business move forward.

Emergency Motions and Same-Day Consultations

A frozen operating account can quickly affect a business.

If payroll is due, vendors need to be paid, or the company cannot access the money it needs to operate, the judgment and bank restraint should be reviewed right away.

Depending on the facts, an attorney may seek emergency relief through an order to show cause or request a temporary restraining order. At the same time, the court considers the challenge to the judgment.

Whether emergency relief is available depends on the case and the court. No particular result is automatic.

What matters is getting the documents reviewed quickly enough to understand the options. That includes the judgment, court docket, MCA agreement, bank restraint, payment history, personal guarantee, and any UCC filings connected to the transaction.

About the Author

Jeb Singer, Esq. is the Managing Partner of J. Singer Law Group, PLLC. He is admitted to practice in New York and previously served as a law clerk to Hon. Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York. His practice includes merchant cash advance disputes, commercial litigation, bankruptcy, and business restructuring. Jeb works with business owners to look beyond the immediate collection problem and determine how the MCA dispute fits into the company’s larger financial situation.