Sued by G And G Funding Group: 7 Things That Happen Next

When G And G Funding Group or any similar entity sues your business, you will want to quickly find a good lawyer and pursue all legitimate defenses your business may have, or think about settlement. Here is a breakdown of what will happen:

1. The papers arrive

If your business has just received lawsuit papers, look over everything carefully and check that you are the defendant. A demand letter or even an email is not a lawsuit. It is important to keep every summons, complaint, envelope or email, as well as any accompanying bank or processor notices. Note the plaintiff and every defendant (including the owners and the business itself), the court and case number, and when and how papers were delivered. If your personal name and the business name both appear on the summons, the lawsuit has named you individually as well as the business. Do not throw the papers in a drawer and ignore them, as time to answer is limited!

2. The response clock starts

For most lawsuits, the deadline to respond will depend on the court and how the defendant was served. It will not necessarily be 30 days from when the papers are handed to the defendant. In New York, you must respond within 20 days if papers were handed to you personally, but in other cases, you might have up to 30 days after service is considered complete. Don’t be confused by calls or settlement talks, which don’t extend the deadline.

A business outside New York is not immune to being sued there, and New York rules don’t necessarily apply to cases filed elsewhere. An attorney should check the summons and service record, since objections like bad service can be lost if not raised properly.

3. A lawyer looks for defenses

When a business is sued, its lawyer can begin by comparing the signed agreement with the complaint, reviewing what was advanced, fees charged, the money collected, and the claimed balance. Just because they claim a balance is due does not make that the truth. The lawyer must also check whether reconciliation requests got a response. But no defense is automatic.

Besides the defenses for your business, the lawyer will also check how each defendant was served, forum and arbitration clauses, and whether the owner was named personally. Find the personal guarantee and what triggered it, and go through business and owner positions separately.

4. The case gets defended

Your lawyer may file an answer or motion, ask for evidence in discovery, or negotiate. A motion to dismiss may not be required. But making one response doesn’t necessarily mean you’ve beaten the clock on later deadlines. It is important to keep your attorney updated on any money paid and every notice, even if you think nothing is new.

5. Pressure on your bank and customers

If you’re faced with a frozen account or notice that processor payments are being held, try to get a copy of the actual document. Be sure not to confuse a UCC filing, a notice to customers, and a court restraint; a notice alone isn’t proof that the claims are valid. It is a bad idea to move funds or close accounts without knowing what you’re doing or getting advice.

A notice to customers or processors is not a judgment, and doesn’t necessarily mean a restraint is also in place. Check who sent it, what agreement it relies on, and which receivables. Hiring a lawyer or sending a letter doesn’t automatically release funds.

6. A missed deadline becomes a judgment

Missing your deadline risks a default judgment. In New York, for a fixed sum, the clerk can enter it within one year of default. But if you appeared, there must be at least 5 days’ notice first.

Once you know that a judgment has been entered against your business, track down the court record for the case number, and get prompt legal help. In New York, you only have a year from when you are properly served with the judgment and a notice of entry to file a motion to vacate a default judgment for excusable default, but there’s no guarantee that you can beat the judgment. After your judgment, the creditor’s attorney can serve a restraining notice freezing your business bank account for up to a year. New York judgments on business debts earn 9% interest a year.

A judgment can also come from a confession of judgment, which skips the usual lawsuit steps. In New York, it can only be filed in the county where the business has a place of business, within 3 years of signing.

7. Settlement may end it

Settling the lawsuit by negotiation is possible. Any offer should be weighed against the strength of your defense, your cash flow, and other creditors. Accepting a lower payment may still leave a big balance, or bring new trouble later if you miss a payment.

Before signing a settlement letter, you should get a deal that states the total settlement amount and payment dates, which parties, agreements and accounts the deal covers, what happens to personal guarantees, whether it ends the lawsuit, whether bank restraints and UCC filings will be canceled, and what happens if a payment is missed.

In a business cash advance case, closing a deal with one funder does not settle cases with other funders. Set up separate folders for each account, and keep up with the cases. Don’t think you can just wait out the deadlines, because delays and errors can cost your business.

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.