The worst place to settle Merchant Cash Advance disputes is out of state, so fix your contracts already!
Our previous article discussed the predictability of usury litigation involving merchant cash advance (MCA) agreements with choice of law clauses in New York, although we posited that things would get (a bit) crazier. But New York is not the only forum in which MCA customers (referred to as “merchants”) assert usury claims.
Despite New York’s choice of law and venue provisions, MCA funders are often forced to defend the legality of their New York MCA agreements when domesticating judgments or being sued by merchants in Sister States, or when making claims in the bankruptcy courts where the debtor merchants are. . Sometimes these procedures don’t go well for funders, but they provide instructive lessons for securing MCA contracts.
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