How to Negotiate a Settlement on Your Merchant Cash Advance
The leverage in an MCA settlement resides in the contract’s vulnerabilities. Not in the merchant’s willingness to pay less. Not in the merchant’s financial hardship. The funder’s willingness to settle is a function of the funder’s assessment of litigation risk, and litigation risk is determined by what the contract contains and what the funder did or failed to do.
The Leverage and Where It Resides
A COJ clause that is unenforceable under CPLR § 3218 creates leverage. A reconciliation provision that was not honored creates leverage. A personal guarantee whose scope was misrepresented by the broker creates leverage. A factor rate that, annualized, invites recharacterization as a usurious loan under Fleetwood Services or Haymount Urgent Care creates leverage.
Without identifiable contract vulnerabilities, the negotiation is a request. With them, it is a calculation the funder’s counsel must address.
The Process
The attorney reviews the contract and identifies the vulnerabilities. The attorney contacts the funder’s counsel and presents the deficiencies. The funder evaluates the cost of settlement versus the cost of litigation. A number is agreed upon. The settlement is documented. The lien is released.
Negotiation is not persuasion. It is the presentation of facts the funder’s counsel must account for. The facts reside in the contract.
The leverage is in the documents. We can find it.
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Our attorneys will review your MCA contracts and identify the vulnerabilities that create leverage for negotiation. The first conversation is a reading of the documents — not a commitment.
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Disclaimer: This content is for informational purposes only and does not constitute legal advice. Results vary based on individual circumstances. Past results do not guarantee future outcomes. If you are in legal distress, consult a licensed attorney.