Sued by Progressive Equity Partners LLC: 7 Things That Happen Next

If your business has been sued by Progressive Equity Partners LLC, the risk is real. Progressive Equity Partners is not obliged to give your company a second chance just because you have no money or your business is in financial distress. It may obtain a money judgment against you and take your money, equipment, and other assets. If you’ve been served with a Summons, and you do nothing, the company can get a Default Judgment against you. You have legal options, including fighting the lawsuit and filing for bankruptcy.

1. The answer clock starts

Under New York law, if you have been served in person with a Complaint, you have 20 calendar days from when you were served with the Complaint and the Summons to answer it. If you were served by some other method such as substituted service, your time to respond is 30 days from when service is complete. If you fail to file a written response within the required time period, the creditor can ask the court for a Default Judgment against you. If the case is in federal court instead of state court, the usual response time is 21 days after service of the summons. The lawsuit usually demands the full accelerated balance and requests fees and interest.

2. You will need a lawyer

You cannot respond on your own behalf, since your company is a legal entity. This means that only an attorney admitted to practice law in New York can respond for you. Remember also that you agreed to a number of points in your contract with the merchant funder. The contract may force you to use New York law and courts no matter where you are. Defending a case far from your home, without a clear personal connection to it, requires money and takes your time away from your business right at the beginning. That is one reason some owners find it easier to give up.

3. You may be named personally

If you have personally guaranteed the debt to the merchant funder, the merchant funder may sue you personally, as well as your company. If a judgment is obtained against you personally, the merchant funder can reach your personal assets. If your company can’t pay the debt, that doesn’t mean you won’t have to. Closing your company may not end the collection effort against you personally, because you can be sued personally on the guarantee. A judgment on the guarantee can become a lien on your house.

4. A default judgment

If you ignore the Complaint and Summons or fail to file an Answer on time, a merchant funder may seek a default judgment. This allows it to collect its debt plus interest, fees, costs, and attorneys’ fees. It has up to one year after the default to ask for a judgment. Once a judgment is granted, you have up to a year from the time you were notified to ask the court to set it aside.

Default judgments are fairly common in these cases. Owners often never get proper service, cannot afford a lawyer in a far-off court, or just miss the date. An Answer can prevent a default judgment and preserve your defenses. Unless you file an answer to the Complaint, your chances of getting a good result, including negotiating a settlement, go down.

5. Your bank account freezes

Your business bank accounts could be frozen once the creditor obtains a judgment against you. Depending on your banking arrangements, the creditor may be able to freeze your personal accounts as well if you have personally guaranteed the debt.

If a creditor freezes your business bank account, that may be an existential threat for your company. Payroll bounces, you can’t pay your vendors, you miss the rent. The merchant funder can serve multiple banks at once. An account levy isn’t the end of the story, but you have to act fast. In many cases, you have a limited number of days in which to make a legal claim to exempt some of the funds, or to challenge the levy itself.

6. They go looking for assets

With a judgment in hand, the creditor will try to get paid, at your expense. In New York, a post-judgment discovery proceeding can force you or your business’s owner to answer questions about assets, bank accounts, and any other property or money the creditor can reach. If you ignore requests for answers, you could face contempt of court charges. The judgment can also be used to take your real property. A turnover order is a court order telling you to hand over specific cash, equipment, or vehicles. A restraining notice to your customers can intercept receivables before they reach you. A New York judgment grows at 9% a year. It is presumed to have been paid off only after 20 years - but the clock restarts with any new payment or written acknowledgment of the debt.

7. You still have options

If you and your company have been sued and served with a Complaint and Summons, you have not lost your company or your assets yet. You can still file an Answer to fight the lawsuit, negotiate with your creditor, or consider bankruptcy. A merchant funder doesn’t have to win just because it has filed a lawsuit against you.

A good defense may be that the merchant funder’s advances are really loans. If your agreement says that you must pay fixed amounts back, and/or there’s no provision for reconciling what you pay and what’s owed, it may turn out that it’s really a loan subject to usury laws. In February 2026, a New York appellate court agreed that Richmond Capital’s advances were usurious loans (fixed daily payments, no real reconciliation).

One alternative to fighting the lawsuit is to negotiate with your merchant funder. It may be willing to take less than the amount it says you owe. A merchant funder may not know how likely you are to fight the suit, how good your defenses are, or whether you might consider bankruptcy. Leverage is often strongest before a judgment. If you instead file bankruptcy, the automatic stay in bankruptcy will stop a lawsuit in its tracks. The business bankruptcy process allows you to continue operating your business under the supervision of a U.S. Bankruptcy Judge. The subchapter V process may be faster and cheaper than regular Chapter 11, but bankruptcy isn’t the right choice for every business, so tread carefully.

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.