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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, 09:29 AM #3
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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, 09:57 AM #4
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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, 10:00 AM #5
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12-01-2016, 10:13 AM #6
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12-01-2016, 10:24 AM #7
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Did they?
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12-01-2016, 10:25 AM #8
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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, 10:26 AM #9
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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 #10
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12-01-2016, 10:50 AM #11
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12-01-2016, 10:53 AM #12
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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, 10:55 AM #13
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, 10:55 AM #14
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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, 10:56 AM #15
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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, 10:57 AM #16
And that could be all it takes to cross the threshold into illegal territory. This course will help you understand the differences between purchases and loans: http://www.counselorlibrary.com/public/courses-mca.cfm
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12-01-2016, 11:04 AM #17
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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, 11:04 AM #18
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12-01-2016, 11:07 AM #19
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Nobody does that and if they do they can and most likely will get sued. The point of a UCC is to inform others that you have an interest in the company (not always secured) as is the case with MCA UCC. It isn't secured because you are purchasing future receivables and if there are no receivables you purchased air...
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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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, 11:24 AM #22
I have never heard of a NO STACKING UCC
how does this differ from a regular ucc and what makes anyone think that people will listen and not stack. Most stackers dont even do a UCC search all hey do is look at the bank account and see who is taking payments and see if they think they can get in and out before the business goes under. They dont care about the positions in front of them so why would they care about the UCC filedJohn 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, 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, 11:33 AM #25
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