60 Day Capital LLC Lawsuit: 6 Defenses Worth Raising in Your Answer

When a lender like 60 Day Capital sues a business over a merchant cash advance or some other kind of credit contract, the first order of business is the answer. Without it, the plaintiff can seek a default judgment, often against the business and its owners who signed personal guarantees. These contracts generally specify that disputes have to be decided in New York. That is where they are filed, even if the business is in Texas, Florida or anywhere else. If you were handed the summons and complaint in New York you must answer within 20 days; if you were served another way the deadline is 30 days. The answer is not just a formality, either; it is the place where you put your defenses on the record, so that you do not lose the right to raise them later. Here are six that are worth raising.

1. Service and jurisdiction

The plaintiff must comply with the rules and laws on serving the summons and complaint properly on you. If it did not, the court will not have jurisdiction over you. If it was not done right, the answer should say so. If you challenge jurisdiction, either on the grounds of improper service or something else, it can be waived if not raised in the answer. Once you raise improper service in the answer, you have only 60 days to move for judgment, unless the court extends the deadline for undue hardship. Procedural niceties have teeth.

2. Is it really a loan

An advance of money to buy a future money stream is not a loan, but judges have eyes. Courts in New York State have seen through the form and peered at the substance, applying laws about loans to deals dressed as something else. A reconciliation clause has real teeth - if it forces the lender to deduct nothing on slow weeks and give money back when it collected too much. But if it is all paper that they never follow, it is just a trap for the unwary. The court also looks at whether there is a finite term for the deal and whether the funder can collect even if the merchant goes bankrupt. And if the deal is really a loan, the usury laws can apply.

3. Criminal usury

A corporation generally cannot use ordinary usury as a defense. You can still argue about criminal usury. In Adar Bays in 2021, the state’s highest court said criminally usurious loans are void. Those bear interest above 25 percent a year and are a felony. LG Funding let the merchant raise criminal usury. The lender had almost complete discretion over how much the borrower paid, and bankruptcy counted as a default. People have fought this fight before. In January 2025 the New York Attorney General won a $1.065 billion judgment against Yellowstone Capital, alleging the advances were really loans with fixed daily payments and illegally high rates. To make that argument, you must plead illegality in the answer.

4. The confession of judgment

Many cash advance agreements include a “confession of judgment.” That means that the borrower admits its debt, so that the lender can go straight to judgment without having to convince a judge the debt is real. It is an open-and-shut deal. But in New York state those can be filed only in the county where the debtor lives or has a place of business. If you live in Texas, the confession is probably going nowhere.

5. Was there really a default

Check to see if there really was a default. It is better to raise that in the answer and not just wait for the plaintiff to make a motion for summary judgment. Check the math. Check it again. Did the funder take into account reconciliation requests? Has it double-counted fees and charges? This is where a lot of cases turn.

6. Notices to your customers

That letter from the funder that reached your customer or your payment processor can be a lot more than just a demand for money. The funder wants to choke off your cash. Notification, though, is something a debtor can challenge. It helps to look at exactly when those letters were sent. Do not delay.

Negotiated Resolution

A lot of merchant cash advance cases end in a negotiated resolution. The stronger your defenses, the more leverage you have. The failure to answer on time can weaken those defenses and give less leverage in the negotiations. If you signed a personal guarantee, you are usually sued along with the business, and the business’s defenses can matter to you.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.