[Cfairbank]

There have been some threads going around the forum lately about the ethics of stacking.

As many people here know, I do a lot of consolidations. We have helped (and continue to help) a lot of companies that got their necks in a noose with daily payments that were beyond their ability to pay. It is their own darned fault for getting in that position, but there are a number of them we can help.

But a deal came up today that we declined coming out of the gate and I thought it was worth sharing here.

The client has eight positions which in of itself is not a deal killer for me (I have consolidated eight positions several times). Three of the positions were funded in mid-late December (within a few days of each other) and one was from November. The client had inserted a note, stating that in the first week of January they put a stop payment on all daily loan payments and had retained a company to negotiate discounted payoffs.

The way I look at this...the client probably went out and solicited a bunch of MCA lenders (several of which are represented in this forum) all at the same time so the credit inquiries might not show up, accepted funding from as many as they could get qualified from and then within a few short weeks they are defaulting. This clearly seems pre-meditated.

Even though the numbers were appealing and I might have been able to do the deal, I declined.

There may be degrees of separation here...but I don't mind helping clients out of a bind on back on the road solid money management. But I won't touch a client that appears to be knowingly and willingly setting lenders up for default. IF they will do it to them, they will do it to me.

I may be setting up a firestorm here, but am curious about how others feel about scenarios like this.

Dan Page
dan@fundingstrategypartners.com

Agreed, getting deals that close does seem premeditated and not someone you'd want to fund -- that being said, while we aren't a second position funder, have to imagine the sixth, seventh, and eight guys had to have "underwritten" it as though they would also get more positions behind them. More importantly, even though we'd have no problem with the number of positions, stopped payments are deal killers for us -- gotta check with my sales guys to see if we saw that deal -- we did see an 11 position deal today that was quite impressive.

As Bob said, shocked that business is still being shopped.