Queen Funding Filed Suit: 7 Questions to Answer Before You Respond

Queen Funding (merchant cash advance company) has sued you. While this does not automatically mean that your business owes Queen anything, ignoring the lawsuit could be a big mistake. Each lawsuit has a deadline for responding, and this one will too. In thinking about whether and how to respond, keep in mind seven questions. First, what is the deadline for responding to the suit? Second, what power do I have to appear for the company? Third, does the agreement contain a “confession of judgment?” Fourth, does the agreement fit the legal definition of a “loan?” Fifth, did reconciliation ever actually work? Sixth, what does my personal guarantee actually say? Seventh, what must be included in any settlement of the matter?

1. Find your deadline

In a New York court, different deadlines apply to appearance. If the papers were delivered to you within New York in person, the deadline for responding is 20 days. This is the deadline from when the papers were served, not from when you looked at them. If the papers were not delivered in person, or if you were outside New York at the time, the deadline is 30 days. If you are not sure, assume the fastest deadline possible applies. Only after the deadline passes can the plaintiff file for a default judgment against you. This just means the plaintiff can go ahead and win the case without your input.

If the papers were left with someone and mailed to you, service is usually considered complete 10 days after proof of service is filed, and time runs from that day. A default judgment can sometimes be vacated within a year if there was an excusable reason for it.

2. Who can answer for the business

While the manager of a corporation or a LLC are allowed to carry out the day to day affairs of the business, in court there are special rules. A corporation or LLC must appear in most New York courts through an attorney. Without appearing through an attorney, a default judgment can be entered against the business.

Queen Funding’s lawyer may contact you. It is important to keep in mind that lawyers cannot help out all the people who call them. They can only represent one client. In Queen Funding’s case, that client is Queen Funding, not you. If you have questions about this, be sure to consult an attorney in your area before making any admissions, signing paperwork, or agreeing to pay anything.

3. Check for a confession of judgment

A confession of judgment is a clause that allows the funder to take judgment against the business without going through a lawsuit. You should also be aware that as of August 30, 2019, New York has barred filing of confessions of judgment against out-of-state debtors, even where signed prior to that date.

A confession of judgment must be filed in the county in which you lived when you signed the agreement, or the county in which you live now, and it must be filed within three years of the date that you signed it. If a judgment is taken against you by confession, the lender may be able to issue a bank restraint.

4. Ask whether it is really a loan

A lot of these cases involve what are labeled “merchant cash advances” or “accounts receivable purchases.” Courts tend to ignore the label and look at whether the thing works like a loan. Some courts in New York have applied a three-part test in determining whether a MCA agreement is a loan. First, does the agreement provide for reconciliation? Second, does the agreement state a specific finite period of time for payment? Third, is there recourse to the borrower if the borrower’s business files for bankruptcy?

A panel of the New York appellate courts ruled, on February 19th, 2026, that the MCA in People v. Richmond Capital was a loan and that it was unconscionable. In a case in Kings County decided in December 2025, a court took the opposite view, and ruled that the agreement was not a loan.

A court has ruled that, in New York, an agreement to pay criminal usury (above 25% per year to a corporation) is void and the payments are not owed. If the loan was given to a corporation, interest cannot be above 25% per year, and the corporation can raise that as a defense.

5. Test the reconciliation clause

One company sued Queen Funding. Its court papers claim that Queen Funding advanced about $6.5 million, and collected back about $10.5 million within two years. It claimed that the reconciliation clause in its funding agreement was a sham. According to court filings, Queen Funding had no reconciliation department, and did not issue refunds to the merchant. A federal court in New York permitted the company’s RICO claims to proceed. According to the court, the company’s complaint plausibly stated that the agreement was a loan.

Reconciliation was originally supposed to adjust your payments to your actual sales. Check your agreement’s own reconciliation provision. If your revenue did fall, what did you do about it? If you requested an adjustment, what happened? This is a reason to keep records of your communications with the funder. If you did ask for a reconciliation, try to find what the funder said.

6. Read your personal guarantee

There are two common types of personal guarantees. A broad, unconditional guarantee makes the guarantor liable when the business does not pay, no questions asked. The good guy guarantee is different. With this type, you are on the hook only if the business does something wrong. Normally that includes things like closing the business, making false sales figures. Whether an agreement is an unconditional personal guarantee, a good guy guarantee, or something else altogether depends on the exact wording and the facts, so be careful to read it and keep track of what happened.

7. Know what a settlement must say

Any settlement should address the following issues: One, is the business being released? Two, is the person signing the guarantee being released? Three, is the lawsuit being dismissed? Four, will any judgment be satisfied? Five, will the UCC-1 statement be terminated? None of those things happen by default, so have someone read your proposed settlement papers before you sign or pay anything. If you sign a settlement that does not answer “yes” to all these questions, you may find yourself embroiled in continuing collection activity. Get a commitment in writing, in the settlement agreement, before paying any money.

Whatever you decide, once you get the summons, keep it in a safe place with all the documents that go with it. These should include the funder’s agreement and any related paperwork, the personal guarantee, bank statements from around the time of the funding, emails to the funder and from the funder. Write down where you were when the summons was delivered, and the date it was delivered. The best way to handle the stress of the situation is to gather information and make a plan to respond.

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.