A Lendini Lawsuit: 6 Ways These Cases Usually End

Lendini, the merchant cash advance funder, has sued your business. Your case will probably end in one of six ways: in a default judgment; a confession of judgment; a protracted fight in court; a ruling that the advance was really a loan; a settlement; or bankruptcy. Which way it goes depends on what you do and how fast. The sooner you talk to a lawyer, the more choices you have.

1. Default judgment

A default judgment means that a judge gave Lendini a judgment against you because it asked the judge to, and you didn’t object. This can happen because you didn’t find out there was a lawsuit. It can also happen because you got notified, but you did nothing. In New York state, you have 30 days or 20 days to answer depending on how you were served. The key to defending against a default judgment is speedy action. When the clock starts running, you want a lawyer helping you.

Be sure to write down when you got each notice, and how. Keep all the papers. And don’t assume that calling Lendini, applying for other financing or even discussions about settlement buy you more time. The court deadlines still run.

If there’s already a default judgment, you can still ask the court to set it aside. But that’s harder. In New York, you can ask to vacate the judgment within one year after notice of its entry. And if you wait too long, you’ll be out of luck.

2. Confession of judgment

Many cash advance contracts include a confession of judgment. This is when you agree that Lendini could go to court, show the judge the contract, and get a judgment without letting you defend. If you want to fight against a confession of judgment, you have to move fast.

In New York, a confession of judgment cannot be filed except in a county where you lived when you signed it or where you live now. A business usually lives wherever it has a place of business. And the confession can’t be filed more than three years after you sign. In Pennsylvania, where Lendini is based, you generally must file a petition to strike or open a judgment within 30 days after notice of execution was served.

Don’t take a court judgment as a done deal just because you signed a confession of judgment clause. A lawyer should review the signed confession, and the court records, for any other defenses. A challenge to a judgment doesn’t mean collection stops. If your account has been frozen, ask for the paperwork behind that.

3. Fighting it in court

If you fight Lendini in court, you’ll want a lawyer. This is because the litigation could be contentious and could last for a while. You need to respond with an answer to the complaint. Then there may be further back-and-forth motions. Then, if the case hasn’t ended yet, you will go into the fact-gathering part of the case, called “discovery.” And there could be lots more motions.

Lendini probably claims its balance is accurate. The claim doesn’t prove that the balance is correct. Compare your own records with their records. Check the advance they gave, payments they collected, and credits for payments returned or disputed. And as to any owner, check how Lendini delivered notice of the lawsuit. A motion to dismiss the case doesn’t promise that the case ends.

Also, check the contract for clauses on where disputes go, what law applies, or arbitration. Just living outside the state where Lendini sued you is usually not, by itself, enough to throw the case out. And answering once doesn’t end it all: you still have deadlines for discovery, further conferences, and more. And as the process goes on, keep your lawyer posted on any payments, billing problems or notices about the account.

4. A ruling that it was a loan

One strategy to fight back against a merchant cash advance funder is to argue that it was really a loan. Calling it a cash advance doesn’t decide whether it’s an advance. In a 2020 case, a New York appeals court said that courts usually weigh three factors. First, is there a reconciliation clause? Second, is there a fixed end date in the contract? Third, would the funder still get to collect the balance even if the merchant goes bankrupt? Each of these points to whether the merchant is guaranteed to pay the advance, just like a loan.

This matters because if a “cash advance” is really a loan, a really high interest rate might break the law. A lender knowingly charging over 25% a year in New York is criminal usury. In a 2021 case, one merchant sued Lendini’s operator two weeks after signing. It argued that fixed daily payments that never tracked the money they took in made the contract a loan, not a real cash advance. But that was just one case, and different facts can change the ruling in the next one. This argument is fact-intensive and may require discovery.

5. A negotiated settlement

As an alternative to fighting it out, you can also work toward a negotiated settlement. This is a compromise where you and Lendini agree about what you owe, in exchange for an end to the case.

When writing your settlement agreement, make sure you cover the total amount to pay, your payment dates, and credits for money already collected. Check which companies and people are covered. Check whether personal guarantees are released. Agree how the lawsuit is ended and any judgment satisfied. Release any bank restraints and UCC filings. Be clear about what happens if you miss a payment. Smaller payments can still leave you owing a big balance. And any default can trigger collection again. A deal with Lendini does nothing about your other debt. And forgiving debt for less than owed usually creates taxable income unless an exclusion (bankruptcy, insolvency) applies.

Having a broker or settlement company negotiating with Lendini isn’t the same as having an attorney who has agreed to appear for each defendant. Doing the talking and appearing in court are separate jobs. Make sure you know who your lawyer is.

6. Bankruptcy

An alternative is to file for bankruptcy relief. Filing automatically stops (stays) lawsuits against you, including Lendini’s. But filing bankruptcy isn’t for everyone. The debt limit for subchapter V small business cases started on or after June 21, 2024 is $3,424,000. Talk to a lawyer about how it fits your situation.

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.