[MCAdude]

https://debanked.com/2019/06/thats-a...-on-wednesday/

“The New York legislature has until Wednesday night to pass two bills that would prohibit the use of COJs, one on out-of-state debtors entirely and the other from being used as a condition in a financial contract. Either or both would effectively outlaw their use in the small business finance industry in New York State. If they do not pass a Floor vote by Wednesday night, the clock on the debate would reset until 2020 and the bills would have to be reintroduced in January.

Both bills have momentum. Both bills have a Democrat sponsor. The Democrats control the Assembly, the Senate, and the Office of the Governor. The bills have at least some support from Republicans. By all counts, at least one of these bills should pass this week.

Bill A07500 would prevent COJs being filed against Non-New York parties by requiring that they only be permissibly filed in a county in which the debtor party “resides.” This bill has already sailed through three committees, the most recent of which had unanimous bipartisan support. Its counterpart in the Senate is S06395.

A03636 is targeted specifically at small business lenders and merchant cash advance companies. “This bill will protect small businesses from predatory lenders that often offer loans and cash advances on the pre-condition that they sign a confession of judgment,” it says. The bill calls for this rule to go into effect 90 days after its passage.

It’s possible the bills could also be reworded at the last minute.

There is no doubt where the impetus for these bills stems from. A07500’s official memo, for example, cites the controversial Bloomberg story series authored by Zeke Faux and Zachary Mider in its footnotes.

If either or both bills pass by Wednesday night, they would still require the signature of the governor. That step, a technicality, would probably provide clarity on the official date of which the amended law would go into effect.”

[abfunders]

I have one big question: If it passes, what will that do to the deals in our pipelines that are more than 90 days in their term?

[Davincinc]

I have one big question: If it passes, what will that do to the deals in our pipelines that are more than 90 days in their term?

pre existing condition and obligated to the term of the contract,

[StealMyDeal]

I have one big question: If it passes, what will that do to the deals in our pipelines that are more than 90 days in their term?

The law prevents the filing of COJs, so it wouldn't surprise me if multiple funders mass-file COJs, even on performing accounts, right before the law goes into effect so they can perfect. Anyone who had a single NSF or any other technical default could easily be subject to this.

[Chambo]

I have one big question: If it passes, what will that do to the deals in our pipelines that are more than 90 days in their term?

State Legislatures do not operate like Cash Advance companies. It would take effect whenever the posted date is, no ifs, ands or butts...they don't care what is already in the pipeline

[J.Celifarco]

State Legislatures do not operate like Cash Advance companies. It would take effect whenever the posted date is, no ifs, ands or butts...they don't care what is already in the pipeline

what I want to know is if the date the law goes into effect is the date the COJ needs to be signed before or as of that date no more can be filed no matter when they were signed. Is the pile of COJ's that all these funders have for their existing merchants about to turn into a pile of toilet paper or will already signed COJ's for active merchants still be able to be filed

[Kevin Henry-Seacoast]

what I want to know is if the date the law goes into effect is the date the COJ needs to be signed before or as of that date no more can be filed no matter when they were signed. Is the pile of COJ's that all these funders have for their existing merchants about to turn into a pile of toilet paper or will already signed COJ's for active merchants still be able to be filed

More than likely.... The date the law goes into effect is the date COJs are not longer valid....past, present, and future.

[J.Celifarco]

More than likely.... The date the law goes into effect is the date COJs are not longer valid....past, present, and future.

that is what I thought as well but was not completely sure

[Peak Solutions LLC]

What route are lenders planing on taking when its time to collect?

[Fetachini]

collections.jpg

[NoBigDeal]

It's a matter of time. At this point most funders have already stopped using a COJ and I'd imagine once this is passed, the rest will have to follow suit. Time for true UW (pricing without the comfort of COJ) to win deals, and bad UW will have their default numbers spike

[Michael I]

It's a matter of time. At this point most funders have already stopped using a COJ and I'd imagine once this is passed, the rest will have to follow suit. Time for true UW (pricing without the comfort of COJ) to win deals, and bad UW will have their default numbers spike

issue is most of them underwrite based on ability to collect . their whole model can crash.

[NoBigDeal]

issue is most of them underwrite based on ability to collect . their whole model can crash.

"Time for true UW to win deals." True meaning they can scout and fund based on viability of the business (from collection standpoint as well) as opposed to filing COJ the fastest

[BB_Cooper]

It's a matter of time. At this point most funders have already stopped using a COJ and I'd imagine once this is passed, the rest will have to follow suit. Time for true UW (pricing without the comfort of COJ) to win deals, and bad UW will have their default numbers spike

Seems like a reasonable reset that will better align the interests of funders, brokers & their merchants-

[NoBigDeal]

Seems like a reasonable reset that will better align the interests of funders, brokers & their merchants-

It might "better align", but will never totally be in line

[WestCoastFunding]

When this passes, most of the 20-60 day payback guys are going to disappear.

[NoBigDeal]

When this passes, most of the 20-60 day payback guys are going to disappear.

It also said it may take up to 90 days to go into effect. That gives those 20-60 day funders at least 2-3 renewals left to fund lol

[Michael I]

Some have their credit lines ( money) based on their process , i wonder if any will lose their lines (backers) once coj goes

[J.Celifarco]

When COJ's go obviously the industry will change. I can't see how companies will still be able to go out and do 4th, 5th 6th positions when they will have no recourse for collections. If all the positions in front of them file UCC's these companies will never be able to get their money. I think this is going to change the industry drastically and we will be moving back to what the industry was like pre COJ, 1st 2nds and some 3rds.

[mcaguru]

Its hard to believe funders would fund based on a coj!

[Nunya]

its hard to believe funders would fund based on a coj!

rip

[Michael I]

Its hard to believe funders would fund based on a coj!

better believe it , you can have 2 exact matching files with the only difference being one has a national bank and one with some local bank in Wyoming . The one with the national bank will get a way higher approval. You see even some companies that started to get rid of coj , it was only on the smaller deals.

[J.Celifarco]

Its hard to believe funders would fund based on a coj!

Its the only reason these companies were will to go out and 5th and 6th and ... positions. They knew if they filed their COJ first they could collect. Now that they cant the high risk lending in this space is going to change drastically. Anyone who thinks this isnt going to have a huge affect on the industry I think is bat **** crazy.

[cmarks]

While valid some funders will lose, others like OnDeck without COJ experiencing higher defaults https://www.pymnts.com/earnings/2019...ds-term-loans/

[NoBigDeal]

While valid some funders will lose, others like OnDeck without COJ experiencing higher defaults https://www.pymnts.com/earnings/2019...ds-term-loans/

I'd think defaults for OD will go down once COJ goes into effect. I wonder how many of those charge offs are due to the merchant getting stacked past 2nd or 3rd position?