One MCA is a problem. Three stacked MCAs are a system failure. Settling them requires a strategy that accounts for the relationships between the funders, the priority of their claims, and the order in which they should be addressed.
Stacked MCAs — multiple merchant cash advances taken simultaneously or in rapid succession from different funders — create a compounding obligation that can consume the business’s entire cash flow. Each advance carries its own daily withdrawal, its own factor rate, its own personal guarantee, and its own UCC lien. The combined daily drain often exceeds the business’s ability to sustain it, which is why the business is seeking settlement in the first place.
Settling stacked MCAs is more complex than settling a single advance because the funders have competing claims, different legal positions, and different incentives. The settlement strategy must account for all of these factors and prioritize the funders in an order that maximizes the overall outcome.
Understanding the Priority Structure
Each funder filed a UCC-1 financing statement when the advance was originated. The order of filing determines the priority of claims. The first funder to file has the first-priority lien. The second has second priority. The third has third. This priority matters because the first-position funder has the strongest collateral position and therefore the least incentive to accept a steep discount. The last-position funder knows it is last in line and faces the highest risk of non-recovery, which can make it either more desperate to collect or more willing to settle cheaply.
The priority structure also affects the negotiation sequence. Settling with the first-position funder first removes the senior lien, which may improve the borrower’s overall financial position and increase leverage against the remaining funders. Alternatively, settling with the last-position funder first — if it can be done cheaply — reduces the total number of daily withdrawals and frees cash flow for the remaining negotiations.
Negotiating with Multiple Funders Simultaneously
In many cases, the settlements must be negotiated simultaneously rather than sequentially. Each funder knows that other funders have competing claims on the same revenue stream. Each funder knows that the business’s capacity to pay is divided among multiple obligations. This shared awareness creates a dynamic where each funder’s settlement calculation accounts for the other funders’ existence.
An attorney managing a multi-funder settlement maintains separate negotiations with each funder while coordinating the overall strategy. Information shared with one funder may affect the negotiation with another. The timing of settlement offers, the allocation of available funds, and the sequencing of agreements all require coordination.