Sued by Cedar Advance? 7 Steps to Take in the First 20 Days

Don’t ignore a lawsuit against your company! If you are sued by Cedar Advance or any other merchant cash advance lender, the clock starts right away. In New York or Florida state court, you typically have only 20 days after service to answer. In federal court, it is 21 days. If you miss the deadline, you can lose and be forced to pay the full amount and legal fees. The best thing to do is open them, make a copy, and get them to a lawyer right away.

1. Save every paper

Received an email or demand letter? That is not a lawsuit. A summons and complaint are. Make a folder or drawer and put in every paper you get about the claim. Envelopes show when you received the summons and complaint. Keep them in a safe place with the rest of the documents. Get all important documents from your hard drive, such as faxes, emails, bank statements, processor notices, your lease, contract, or loan documents. Don’t throw anything away.

2. Find your deadline

Look at where and when you were sued, the caption, and the notice of service. This will tell you which court, who was named (you and/or the business), the index number, and when service was complete. The deadline to answer varies by court, when and how you were served, and where the lawsuit was filed. For New York state court summons and complaints, you have 20 days to answer after service. For substituted service, there is an extra 10 days, counted from when service is complete. For federal court, you have 21 days to answer. In Florida, you may have 20 days.

3. Hire a lawyer who appears

In New York state court, any corporation must defend through an attorney (there are narrow small claims exceptions). A settlement company or broker who is negotiating is not defending the case. If a settlement company or broker is negotiating for you, confirm in writing that a lawyer agreed to appear and when. Don’t assume that calls with the funder or settlement talks extend the deadline. They don’t.

4. Read the fine print

A 2023 Cedar Advance agreement filed with the SEC picked Florida law and Florida courts but let Cedar sue elsewhere. Being based out of state doesn’t by itself get a case dismissed. Make sure to check and confirm the law that controls the deal before you start.

Cedar’s arbitration clause lets Cedar choose the American Arbitration Association or RapidRuling. Under it, if a defense to arbitration is not timely raised, it is waived. Check the agreement, respond to the arbitration demand in 20 days, and consult with a lawyer. The New York Attorney General sued Rapid Ruling on June 8, 2026, alleging no small business appeared in 97% of roughly 3,000 arbitrations in the first three years.

5. Check the numbers

Cedar will say it had a right to collect a certain amount, but don’t assume its claims are correct. Look at your contract with Cedar, the written demand for payment, and the complaint. Compare them. Did Cedar credit any returns? Did it back out any reversed charges? If your revenues fell off the cliff, make a note. Did Cedar acknowledge errors or overcharges? If so, save the letter or email. Even if the agreement calls it an advance and claims it’s not a loan, that doesn’t necessarily make it so.

If Cedar wins, the merchant and guarantor may have to pay Cedar’s “reasonable” attorney fees. Cedar’s agreement also allows Cedar to recover a contingency fee up to 40% of the amount claimed. If an owner was named, check the guarantee.

6. Don’t move money yet

Get a copy of any restraining order or notice of lien, check who sent it, look for a docket number, and check the court file to see whether it is real and legitimate. A notice of assignment is just a notice. It doesn’t prove any of the claims in it are actually valid. Get advice before moving money or changing accounts.

7. Settle with care

Settlement is possible. Make sure the deal is fair, the release will be signed, and there is proof in writing of how much is to be paid and when. Also get written confirmation of who is released, the lien, and what happens if a payment is missed.

Default Judgment Against You

If you missed the deadline to answer and have a default judgment against you, get the court record and documents and see a lawyer right away. If you’re sued in New York and default on answering, a default judgment against you may be set aside with a motion for excusable default. But you have to move fast. The motion must be made within 1 year of service of the judgment with notice of entry.

Find your deadline and make sure the court date is in your calendar and then keep a backup.

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.