Icg Capital Funding LLC Lawsuit: 6 Defenses Worth Raising in Your Answer

If ICG Capital Funding LLC hits you with a merchant cash advance suit, you need to answer the case quickly. ICG’s paperwork seems strong, but six defenses are worth raising in your answer: improper service, no personal jurisdiction, wrong balance, really a loan, criminal usury, and limits of your personal guarantee. None of these is automatic, and some are lost if left out of your answer, so list them all, and seek legal advice within your deadline.

1. Challenge the service

If you didn’t get the papers in the proper way, that might get the case thrown out. Write down how and when the papers arrived. Who got them? Where? When? In New York, if you were handed the summons in person, you have 20 days to answer, after other service, you have 30 days after the service is complete. If you answer but object to the service, you must move for a judgment that the service was improper within 60 days of serving your answer or the objection is lost unless the court extends the time.

New York day counts apply only to a case filed in New York. If the case isn’t in New York, or if it is in federal court, you will have a different set of rules. Have a lawyer check the summons and service record before counting days. If a settlement broker or middleman represents they’re negotiating the case, confirm directly that a named lawyer has committed to defend each defendant in the suit and attend all court dates.

2. Contest personal jurisdiction

If you are from outside of New York, there is a chance that the court cannot reach you. The right to object to jurisdiction is lost if it is left out of your answer or pre-answer motion. Being out of state alone does not guarantee dismissal of the case. Also, be aware of any forum, governing law, or arbitration clauses, in the agreement: those determine where any dispute must be heard, and where the law that decides the dispute comes from.

3. Dispute the balance

Compare the agreement with the complaint. Are the amounts of the advance, collected, credited, and fees correct? A demand doesn’t prove the numbers. Note that any defense of payment should be in your answer, or the surprise defense rule may keep it out.

Other defenses, like release, fraud, illegality, must be raised in your answer if leaving them out would surprise the other side. If a different company is suing you, question its right to enforce the agreement.

4. Argue it was really a loan

The courts must examine the transaction and do not accept a label as determinative. The New York appeals court in LG Funding named three factors: a reconciliation provision, a finite term, and recourse if the merchant goes bankrupt. Compare the contract with what happened. Did you ask to reduce payments because your revenue dropped? How did the funder respond?

Regulators take this seriously. In January 2025, the New York Attorney General announced a $1.065 billion judgment against Yellowstone Capital. The AG said its merchant advances were really loans: a fixed daily payment and rarely honored reconciliation.

5. Plead criminal usury

New York criminal usury is knowingly charging over 25% a year on a loan. Companies cannot claim usury, except criminal usury. In Adar Bays (2021), New York’s highest court held that a criminally usurious loan is void, and the lender cannot collect any principal or interest. The LG Funding court explained that criminal usury can be raised as a defense, but not as a counterclaim.

This defense is good only if the advance is found to be a loan. Enter it as an affirmative defense in the answer. You should have a lawyer test the numbers.

6. Separate the guarantee

If you are named as an owner, find the guarantee and check to see if it was signed personally and what it says about when it kicks in. A guarantee of performance differs from an unconditional payment guarantee. Both business and owner should be separately reviewed, and there is a possible conflict of interest for one lawyer to represent both owner and business. Did you agree to pay whether the business did or not? What precisely does the guarantee say?

Also check online to see if a confession of judgment was already filed. If it is, seek prompt review. A New York confession of judgment can only be filed in the county where defendant lived when signing or lives at filing. A business resides wherever it has a place of business.

When you are talking with the other side, it does not stop the court clock. Negotiating the case may be the best outcome, but does not mean that defenses should be neglected. Before settling, weigh any offer against your defenses, cash flow, and the costs of prolonging the matter. If you settle, get the deal in writing: releases of guarantees, how the case ends, and what happens after a missed payment.

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.