Cincinnati MCA Defense Lawyers Business Debt Relief

Businesses face financial challenges, but legal help provides options. Our firm assists companies struggling with debts from merchant cash advances (MCAs) and other lending. We offer realistic solutions to resolve business debt and achieve financial freedom.

Understanding Merchant Cash Advances

Merchant cash advances provide fast financing based on a business’s expected future credit card sales. MCA companies purchase a share of future receivables at a discount in exchange for an upfront lump sum payment. This type of financing appeals to small companies with limited access to traditional loans.However, MCAs differ fundamentally from loans in ways that harm borrowers:

• No Truth in Lending Act protections on rates and terms
• Extremely high effective interest rates often exceeding 100%
• Daily repayments that drain cash flow
• Personal guarantees that threaten owners’ assets

Many businesses turn to MCAs out of necessity then struggle with rapid, uncontrolled repayment schedules. Our attorneys help clients restructure or defend against abusive MCA agreements.

Cincinnati MCA Defense Attorneys

Our firm’s Cincinnati office focuses specifically on assisting local companies who entered harmful MCA contracts. We handle all aspects of MCA-related legal issues, including:

• Litigation – We defend clients against MCA lawsuits and work to invalidate or alter unfair contracts through affirmative claims.
• Workouts – We negotiate with MCA providers to restructure agreements, reduce payments, waive fees, and craft solutions that improve a business’s financial outlook.
• Bankruptcy – Filing Chapter 11 or 7 bankruptcy stops collections and discharges personal guarantees while allowing a business to reorganize or wind down on its own terms.
• Defense Against Fraud Claims – MCA companies often accuse businesses of fraud when they fall behind on payments or close down. We defend against such allegations.

Attorneys in our Cincinnati office have successfully resolved hundreds of MCA-related disputes through settlements, judgments, bankruptcies, and other outcomes that reduce debts. We know what arguments and strategies convince courts and MCA companies to reach reasonable resolutions.

Realistic Assessment of MCA Issues

Too many lawyers make unrealistic promises that they can easily invalidate MCA contracts in court due to technical violations or usury claims. In practice, such arguments rarely succeed on their own. Courts enforce many MCA agreements despite their predatory terms.Our firm takes a practical approach based on the realities of MCA litigation and workouts. We use technical arguments selectively as leverage while developing backup plans through settlements or bankruptcies. Rather than making false promises, we craft solutions tailored to a client’s unique situation.

Individualized Attention and Service

Dealing with MCA debts places extreme stress on business owners and managers. Our lawyers ease this anxiety by fully taking control of interactions with MCA providers. Clients focus on operating their companies while we handle legal matters using an empathetic approach.Features of our MCA defense services include:

• A single point of contact available to address client questions and concerns
• Customized options to improve cash flow, reduce debts, and achieve the best outcome
• Document review and contract analysis with explanations in plain language
• Full transparency regarding the risks and benefits of different strategies
• Hands-on support throughout negotiations, litigation, bankruptcies, and post-judgment issues

Our individualized services reflect an understanding that behind every MCA contract sits a hardworking business owner in need of help. We simplify complex legal problems so clients can make informed decisions.

Contact Cincinnati MCA Defense Lawyers

Delancey Street’s team of seasoned attorneys assist companies across Ohio and Northern Kentucky struggling with merchant cash advance debts. We invite you to schedule a free consultation to discuss your situation in confidence. Our realistic approach to legal issues offers the clarity and relief businesses need to move forward.

Common Legal Defenses Against Abusive MCA Contracts

Merchant cash advance agreements often contain provisions that shock the conscience. However, courts still enforce many one-sided MCA contracts under contract law and lending regulations. Businesses facing collections or lawsuits should understand the limited defenses available.

Unconscionability

• Argues that grossly unfair contract terms indicate an “absence of meaningful choice”
• Rarely succeeds against MCA contracts alone but useful as supporting claim
• Requires showing of both procedural (deceptive practices) and substantive (overly harsh terms) elements
• Dismissed if a business owner had representation during signing

Usury

• Asserts rates and fees exceed state statutory limits on interest charges
• MCA companies avoid usury restrictions by claiming “true sales” of future receivables
• Still useful to contest rates using accounting methods for imputed interest

Breach of Contract

• Requires showing MCA provider violated agreement terms
• Most contracts heavily favor providers, limiting this approach

Fraud

• Involves showing an intentional misrepresentation of facts during contract formation
• Difficult to prove elements of reliance and intent

RICO

• Allows private action under the federal Racketeer Influenced and Corrupt Organizations Act
• Requires showing criminal enterprise engaged in racketeering activity
• Emerging approach that faces uncertain legal prospects

While achieving definitive court rulings against predatory MCA firms remains an uphill battle, our lawyers employ these claims as leverage while pursuing settlements and alternative strategies tailored to a client’s needs. Contact our office to discuss options for contesting your agreement.

Negotiating MCA Debt Relief Through Settlements

Litigation brings uncertainty, delays, expenses and disruption to business operations. Many companies struggling with MCA payments prefer to negotiate reasonable settlements that reduce debts and ongoing costs.

What Settlements Achieve

Through settlements, our lawyers have achieved outcomes such as:

• Reduced principal owed by 20% to 60%
• Lower fixed weekly payments
• Interest rate reductions
• Forgiveness of all outstanding fees
• Releases of personal guarantees
• Dismissal of fraud allegations
• Mutual non-disparagement clauses

Settlements provide permanent changes to MCA agreements secured through legally binding contracts overseen by our law firm.

Real World Examples

We recently settled a $92,000 MCA debt from 2017 with escalating weekly payments of $2,500 down to $22,500 with no further interest or fees. For another client we negotiated a $190,000 MCA balance down to $60,000 at prime plus 2% interest.

When Are Settlements Feasible?

Whether an MCA provider will settle depends on their perceived ability to recover amounts owed. The best case for settlement involves:

• Defenses to raise doubts over the agreement’s enforceability
• A business on the brink of insolvency or closure
• Risk of bankruptcy and having the contract discharged
• Onerous litigation expected to exceed remaining collections

Even without an ironclad legal case, these dynamics convince many MCA firms to take a reduced settlement rather than risk nonpayment.

Our Settlement Process

We take over all direct engagement with MCA providers to negotiate debt relief. Our attorneys project authority that gets results where anxious business owners often fail when acting alone.

• Assess Defenses – We thoroughly analyze the MCA agreement to identify leverage points for settlement discussions.
• Financial Analysis – We collect internal business records to demonstrate inability to sustain payments and potential insolvency.
• Face-to-Face Meetings – After initial proposals and counter-offers by phone and email, we directly engage MCA firm decision-makers to push for the best deal.
• Binding Agreements – Settlement terms require detailed contracts we negotiate to the business’s advantage while eliminating all contingencies.

Throughout negotiations our main priority is our client’s financial survival and freedom from MCA debts. Contact us today to explore settlement options.

Restructuring and Reaffirming MCA Debt Through Chapter 11 Bankruptcy

Chapter 11 bankruptcy allows distressed businesses to cancel debts, gain time to reorganize, and address cash flow issues while continuing normal operations. Our law firm leverages Chapter 11 tools to help clients challenge merchant cash advance claims.

Chapter 11 Bankruptcy Benefits

Key legal and practical advantages of Chapter 11 bankruptcy for businesses facing MCA debts include:

• Automatic Stay – Stop collections lawsuits and enforcement. Redirect payments to general operating account rather than MCA firm.
• Cramdown – Reduce principal and interest rates to match actual value received and market terms.
• Cash Collateral – Obtain court authorization to use accounts receivable and credit card receipts despite MCA firm claims.
• Executory Contract – Debtor assumes beneficial provisions and rejects or renegotiates detrimental sections of MCA agreement.
• Increased Leverage – Greater bargaining power to achieve consensual settlement and restructured terms.

Typical Chapter 11 Process With MCA Debt

The standard Chapter 11 process plays out through the following stages:

1. File bankruptcy petition and trigger Automatic Stay against collections
2. File motions to use Cash Collateral and sell assets
3. Propose Cramdown plan that reduces MCA debt through Executory Contract powers
4. Negotiate with MCA firm on settlement and reaffirmation agreement
5. Obtain confirmation of consensual plan
6. Emerge from Chapter 11 with reduced and restructured MCA contract

This streamlined process uses specific bankruptcy law tools in the context of complex litigation and negotiations. Our expertise makes it work smoothly.

Viability Assessment for Chapter 11 Filing

Chapter 11 bankruptcy imposes administrative burdens and costs on companies. Our attorneys determine if it presents a viable option through a detailed business and legal analysis examining:

• Ability to pay professional fees and U.S. Trustee charges
• Projected income and expenses during the bankruptcy
• Assets at risk if Chapter 7 filed instead
• Strength of contract defenses and bankruptcy claims
• Willingness of management to operate under court oversight
• Likelihood of achieving consensual settlement

We structure options to address all issues uncovered during viability assessment. Contact our office to schedule your evaluation.

Defending Against Fraud Claims in MCA Disputes

Desperate merchant cash advance firms often resort to dubious fraud allegations when borrowers fall behind on payments. Such claims directly threaten business owners and managers with personal liability. Our lawyers vigorously defend clients against financial harm from false or exaggerated accusations.

Common MCA Fraud Theories

MCA contracts require full disclosure of debts, liens and impending changes in the business. Companies often run afoul of these vague provisions as circumstances deteriorate. MCA providers then claim:

• Breach of contract
• Fraudulent inducement
• Fraudulent misrepresentation
• Civil theft
• RICO violations

These theories open the door for severe judgments. For example, treble damages apply to civil theft in certain states.

Building an Effective Fraud Defense

We refute such allegations through legal and factual arguments including:

• Lack of Intent – No evidence of willful deception or concealment of material information.
• Due Diligence Failures – MCA firm did not properly vet statements during underwriting.
• Unclean Hands – MCA company operated in bad faith through extreme rates and aggressive collections.
• Innocent Misrepresentations – Any factual discrepancies resulted from normal business changes or poor accounting rather than purposeful lies.
• Improper End-Run – Fraud allegations substitute for unenforceable contract claims.

Skilled litigation requires both legal persuasiveness and narrative credibility. Our approach defeats fraudulent accusations by exposing the truth behind MCA disputes.