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11-30-2016, 06:49 PM #1
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Stacking Lawsuits
Hey everyone-
As I recall, there were some stacking lawsuits (e.g. Rapid Advance) that got filed this year for tortuous interference when one lenders stacked on another when a no-stacking UCC had been filed.
Any updates/insights on those lawsuits?
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11-30-2016, 06:56 PM #2
Rapid withdrew the one suit they had against another funder in Delaware after it became likely that they could not meet the bar to prove tortious interference in the circumstances presented.
I believe that Dealstruck's lawsuit against other funders for stacking was also not successful
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12-01-2016, 02:04 PM #3
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To clarify Sean's comments, we withdrew one of our stacking lawsuits because we could not get the documentation necessary to prove the impact of the stacking loans on the merchant's cash flow. The merchant was out of business and gone, we believe because of the stacker's actions, and we couldn't get bank statements etc. necessary to move forward.
We have another case moving forward against Pearl in Maryland. The court's opinion, in denying Pearl's motion to dismiss, was supportive of our claim and that tortious interference is a valid course of action.
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12-01-2016, 02:21 PM #4John Celifarco
Managing Partner
Horizon Funding Group
3423 Ave S
Brooklyn, NY 11234
T: (347) 773-3990 | F: (718) 795-1990
Linkedin: Profile
Email: john@horizonfundinggroup.com
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12-01-2016, 05:43 PM #5
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David Obstfeld
Chief Executive Officer
SOS Capital
1330 Ave of the Americas, NY, NY 10019
212-235-5455
SOSCapital.com
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12-01-2016, 05:51 PM #6
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12-01-2016, 06:00 PM #7
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David Obstfeld
Chief Executive Officer
SOS Capital
1330 Ave of the Americas, NY, NY 10019
212-235-5455
SOSCapital.com
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12-01-2016, 09:29 AM #8
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It's hard to make the tortious interference argument on a Cash Advance since you're purchasing a percentage of his future receivables. So for example if you were to purchase 100% of his future cash (would never happen) and then got stacked you'd have an easier time making a case.
David Obstfeld
Chief Executive Officer
SOS Capital
1330 Ave of the Americas, NY, NY 10019
212-235-5455
SOSCapital.com
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12-01-2016, 10:00 AM #9
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12-01-2016, 10:25 AM #10
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David Obstfeld
Chief Executive Officer
SOS Capital
1330 Ave of the Americas, NY, NY 10019
212-235-5455
SOSCapital.com
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12-01-2016, 09:57 AM #11
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- Apr 2013
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- 117
They were both suing Pearl. But of course, if Pearl's contracts are illegal in and of themselves (as determined by recent court ruling) can't all of Pearl'smerchants sue for fraud?
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12-01-2016, 10:13 AM #12
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12-01-2016, 10:26 AM #13
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David Obstfeld
Chief Executive Officer
SOS Capital
1330 Ave of the Americas, NY, NY 10019
212-235-5455
SOSCapital.com
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12-01-2016, 10:44 AM #14
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12-01-2016, 10:50 AM #15
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12-01-2016, 10:53 AM #16
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"According to the affidavit of Pearl's Head of Underwriting, submitted in support of the motion for default, the ledger annexed to that motion "shows that defendants began with a total of loaned funds of $13,050.00,[FN2] against which they paid a total of $6,734.00, leaving a balance due of $6,316.00, to which - per the agreement - has been added check bounce fees of $665.00 and the contractual default fee of $2,500, making a total due to $9,481.00." Plaintiff also claimed entitlement, under Agreement ¶ 3.4, to recover any costs associated with this action, plus reasonable attorney fees in the amount of $3,160.00. Plaintiff also alleged that defendant Neely guaranteed defendant RDN's performance under the Agreement." shows that defendants began with a total of loaned funds. Also, on the funding call the underwriter used the term "loan"
David Obstfeld
Chief Executive Officer
SOS Capital
1330 Ave of the Americas, NY, NY 10019
212-235-5455
SOSCapital.com
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12-01-2016, 10:24 AM #17
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Did they?
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12-01-2016, 10:55 AM #18
dpFund what is a no stacking UCC?
staten how are Pearl's contracts illegal? did you read the ruling? A big factor was that their contract was illegible.
kevinhenry how are the assets secured? do you even know what you're talking about?
what the hell are you people talking about?Anthony Diamond
Underwriter
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12-01-2016, 10:56 AM #19
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David Obstfeld
Chief Executive Officer
SOS Capital
1330 Ave of the Americas, NY, NY 10019
212-235-5455
SOSCapital.com
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12-01-2016, 11:19 AM #20
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- Apr 2013
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- 117
Indeed I did. Recourse issue. Huge deal.
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12-01-2016, 11:22 AM #21
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12-01-2016, 11:04 AM #22
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ADiamond....I am a senior lender and yes I know what I am talking about. If you stack a senior lender you run the risk of having the client thrown into default and sued.
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12-01-2016, 11:24 AM #23
I don't think you do, and it happens all day every day - show me one "senior" lender that stopped taking payments and just decided to put the account into default because the merchant stacked?
And I was referring to the second part of your previous statement "The Senior Lender can sue because in most cases all the assets are secured." - regarding the assets being secured.
If you have a 1st position lender that has their money structured more like a "loan" then ok, maybe some assets are secured. You are talking about stacking - 1st position lenders don't stack - anyone who stacks would most likely be MCA and is buying receivables and securing future receipts, not assets.
Let's all just be honest... it happens every day and some lenders try to sue, most don't win and for the most part no body does anything about it.
Merchants stack themselves, no lender puts the account into default and stops taking payments.
Corporate turnaround poaches MCA ucc's and commits blatant tortious interference, no one does anything about it.
So what is your point, really?Anthony Diamond
Underwriter
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12-01-2016, 11:31 AM #24
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Buying future receivables or receipts are assets that may be secured by another party.
Most Senior Lenders either don't know their customer has taken a cash advance or have ignored it not to upset the relationship because the client is current on payments. If things go sideways, you can cool believe the senior lender or bank will defend their position.
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12-01-2016, 11:36 AM #25
I am having a hard time following what you are trying to say. The whole reason MCA can charge what they do is because we are buying future receivables this is an unsecured transaction. Once it is secured you are subject to different lending guidelines and need licenses depending on the state. You cant have it both ways either it is a LOAN or it is an MCA but what you are describing sounds like you are trying to be both at the same time which you cant do.
Also please let me know what you mean by SENIOR LENDERJohn Celifarco
Managing Partner
Horizon Funding Group
3423 Ave S
Brooklyn, NY 11234
T: (347) 773-3990 | F: (718) 795-1990
Linkedin: Profile
Email: john@horizonfundinggroup.com
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