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01-19-2015, 10:33 AM #1
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- Nov 2014
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- 76
Funder requesting notarized "Affidavit of Confession of Judgement"
Just received docs from a funder and it includes an "Affidavit of Confession of Judgement" . This is for a small $7k advance with approx $10k payback amount over less than estimated 4 months. The Judgement states among other things
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Merchant Defendant hereby confesses judgment and authorizes entry of judgment in favor of Plaintiff and against Defendants in the Federal District Court for the Southern District of New York, Supreme Court of the State of New York, County of New York, Supreme Court of the State of New York, County of xxxxxx, and/or Civil Court of the City of New York, County of New York, in the sum of $xx,xxx.00 less any payments timely made pursuant to the secured Merchant Agreement dated JANUARY 16, 2015, plus legal fees to Plaintiff calculated at
twenty five percent (25%) of the total of the aforesaid sums, costs, expenses and disbursements and interest at the rate of 16% per annum from JANUARY 16, 2015, or the highest amount allowed by law, whichever is greater. Such amount shall be set forth in an affidavit to be executed by Plaintiff or an affirmation by Plaintiff’s attorney, which shall be attached hereto at the time of entry of this Affidavit of Confession of Judgment.
This confession of judgment is for a debt due to Plaintiff arising from Defendants’ failure to pay to Plaintiff, Merchant Defendant’s accounts-receivable, which were purchased by Plaintiff pursuant to the secured Merchant Agreement dated JANUARY 16, 2015, and for Defendants’ breach of the secured Merchant Agreement, plus agreed-upon interest, attorneys’ fees, costs and disbursements, as agreed-upon by Merchant Defendant and myself, under the secured Merchant Agreement, dated JANUARY 16, 2015, of which supporting documents include a Personal Guarantee and a UCC-1 financing statement(s).
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My questions:
1. Is this standard in the industry to ask merchants to sign these?
2. Does this get filed/recorded only if merchant actually defaults?
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01-19-2015, 10:36 AM #2
- Join Date
- Jul 2013
- Posts
- 352
Never seen that on a $7k deal. More common with high risk lenders or large funding amounts.
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01-19-2015, 10:38 AM #3
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- May 2014
- Posts
- 317
I've actually seen it on smaller deals that are considered super high risk.
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01-19-2015, 10:57 AM #4
- Join Date
- Apr 2013
- Location
- NY
- Posts
- 203
In my experience you will only see this from high risk/stacking funders. I have never seen an A paper funder use a COJ. a few of the high risk 2nd 3rd etc position funders require that on all deals, we have even seen it on advances as small as 3k. it would only be filed if merchant defaults, the enforceability of it is debatable
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01-19-2015, 11:28 AM #5
YS is the only funder I've seen use a COJ
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01-19-2015, 11:39 AM #6
- Join Date
- Jan 2014
- Posts
- 283
I've seen a few Lenders that use them.....usually for deals over $20,000 or the higher risk, like a consolidation...
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01-19-2015, 11:45 AM #7
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- Dec 2014
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- 50
Max requires them as well
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01-19-2015, 12:53 PM #8
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- Nov 2014
- Posts
- 76
This isn't a stacked deal..no other outstanding loans or advances (that I know of)... Merchant has limited time in business (less than 6 months) so maybe this is part of the reason funder is requesting...But I've never seen this...I guess it is more common practice than I thought..
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01-19-2015, 02:08 PM #9
Pearl requires it sometimes....
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01-19-2015, 03:03 PM #10
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- Dec 2014
- Location
- Long Beach, California, United States
- Posts
- 26
I just had one for a 3rd position loan.
Mullti Vision Financial
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Financial Capital Advisor
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01-19-2015, 10:02 PM #11
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- Jul 2014
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- Online
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Funder requesting notarized "Affidavit of Confession of Judgement"
Risky deal or a high amount... You should ask them if it was a mistake.
Amanda Kingsley
DailyFunder: WhoisKingsley
This is me. https://www.facebook.com/whoiskingsley
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01-20-2015, 09:42 AM #12
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- Sep 2014
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- 720
COJs are becoming increasingly common... YSC, Tyrian Bull, and many others are using them (typically on $10K+ deals). COJ sounds a little aggressive for the deal you are outlining though.
I haven't researched the actual value of a COJ from a funder's standpoint, but I would assume that it would allow you to sell non-performing MCA debt at a higher price? Does anyone have any COJ knowledge they would like to share (legally speaking).
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01-20-2015, 11:07 AM #13
- Join Date
- Nov 2014
- Posts
- 97
They Are Standard for YSC and Pearl . Others ask a Performance Guarantee that even looks similar it does not sound as aggressive. The COJ sucks and Ive had to get them for less than that , If the deal is somewhat clean take is somewhere else and save your self the hassle of trying to sell a COJ to your merchant. They Never Like it but if they need the money and its the only way then they will take it.
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07-23-2016, 10:50 PM #14Karen37aGuest
I've seen a few funders require them ..usually c/d paper and 20/25k and up.
Maybe people who are putting skin in the game see less
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07-24-2016, 09:11 PM #15
Definitely becoming more common on the D paper deals with multiple positions, but considering this is a 1st position, that's relatively surprising. Must be TIB or maybe there's some derogs on merchant's credit that frightened the funder?
RYAN RIDGWAY Managing Partner, Strategic Capital
Office: 800.440.6448 | Direct: 816.298.0966 | Fax: 816.298.0857
10551 Barkley St. Suite 403 Overland Park, KS 66212
rridgway@capitalwithstrategy.com | www.capitalwithstrategy.com
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07-25-2016, 12:10 PM #16
- Join Date
- Sep 2014
- Location
- Bronx, NY 10470
- Posts
- 7
Most funders have an amount where over which constitutes a COJ, normally over $50k or so. If you are funding a CA deal, the COJ has to notarized by an attorney. It`s basically a statement of fidelity, you can always tell a merchant who is going to default because they are hesitant to sign them because they know it`1s one more nail in the coffin if the hammer ever comes down. What I don`t know is how strong it holds up in court when presented into evidence.
Kieran McQuaid | Director of ISO Relations and Sales | 6th Avenue Capital
New York| O: +1 646 705 0099 | M: +1 212 470 7188| | F: +1 888 747 8744
Main: +1 877 223 8004 kieran.mcquaid@6thAvenueCapital.com
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