Sued by Grp Funding? 7 Steps to Take in the First 20 Days

Answer the complaint promptly. Do not let a judgment be entered against you. What you do next matters. You’ll need to start gathering critical documents while seeking legal assistance immediately. If you were sued in state court in Massachusetts or New York, you generally have 20 days from when you were served to file a response; have a lawyer advise you what the deadline is in a particular case.

1. Confirm what you received

A single demand letter or email is not a lawsuit. A summons and a complaint are a lawsuit. The plaintiff (party starting the lawsuit) may be named as “NAPA Funding Group LLC,” GRP Funding’s legal name. Sometimes there are multiple defendants - for example, both a small business and the business owner - so verify who or what all defendants are. A state court may be listed, with a case number. Write down the date the document arrived, and how (mail, email, hand-delivered). You may need to prove the date you were served, and how, later.

2. Find your real deadline

If you fail to answer before the deadline, you may not be able to mount a defense. If you were sued in Massachusetts state court, you must file your answer within 20 days of when you were served with the summons and complaint (not within 20 days of when you got the mail). In New York state courts, you generally have 20 days from when you were served to answer the complaint - or 30 days, for situations like substitute service or service outside the state. The federal courts may give you 21 days. Don’t assume 30 days. Phone calls, or settlement talks, with GRP Funding, or NAPA, do not extend your deadline or nullify your case.

Even if you think the plaintiff did not serve you properly, or the amount is incorrect, act promptly. You could be on shaky legal ground, or lose rights if you take the wrong next steps.

3. Get a lawyer on the case

A lawyer should always check the rules, summons, complaint and service records before calculating a deadline. Generally, when a corporation is named as a defendant in New York state court, only a lawyer can appear in the case for the corporation, so you need to hire a lawyer promptly. If a lawsuit got to a docket but you are negotiating with a settlement company, settlement is not the same as defending a case. Additionally, don’t assume a lawyer agreed to represent everyone named as a defendant; ask for confirmation.

4. Pull your own numbers

Start to reconstruct the financial transactions, as best you can. Find any agreements, amendments, and any personal guarantee you signed. Get your own payment and bank records, and a complete list of all deposits NAPA or GRP Funding made and charges they deducted from the account. If the complaint lists the amount NAPA or GRP Funding claims they advanced and collected, compare it with your records. Do the complaint’s claims or math even make sense? Are there any extra, suspect fees they charged? A general balance demand does not mean the sum claimed is accurate.

5. Look hard at reconciliation

The fact that this was presented as a deal to sell future receivables, but with fixed daily or weekly repayments that could be reconciled at month’s end, is crucial. Did your sales drop significantly over time? Did you ask for a reconciliation and adjustment to the deductions? What numbers did you supply to NAPA? What numbers did they supply to you in response? The label “advance” or “loan” will not control what this was for legal purposes. An experienced finance, collections and contracts lawyer will weigh the facts to advise on what it was under governing law.

6. Protect yourself and your accounts

If you were named as a defendant individually, find any personal guarantee you signed, and confirm the truth on what triggers it. GRP Funding language says owners are bound for specified breaches of covenants, not for payment. A lawyer should review all the contracts in detail, since the business and owner could end up with different defenses. If NAPA froze your business bank account or took payments from customers, get all the underlying court documents, letters and notices, and verify what they say. A UCC notice, a UCC lien filing, and a freeze or restraining order are different animals. Hiding funds, moving accounts, transferring ownership, or selling off assets without advice may trigger expensive troubles later.

In those same contracts, gather all the clauses you can find on the physical place that any dispute can be filed, who or what decides the dispute, and which state’s law controls. Being “located” outside the state where the case was filed does not by itself mean you should be dismissed. The same clause on choice of law may not necessarily govern choice of venue. When your state’s rules are important to your defenses, get a lawyer to weigh your options.

7. Check for a judgment, then weigh a deal

Check the court record to find out if a default judgment has already been entered, or if a confession of judgment was recorded. A lawyer can advise on getting relief, but it is not automatic. In New York, after a default on a fixed sum, the plaintiff can request the clerk of the court to enter a judgment against the defendant within one year. If you missed filing your answer before a deadline, within one year after getting notice that they got the judgment, you can try to vacate the judgment for excusable default. If you signed a confession of judgment in your contract, that’s only valid in the county in which you lived when you signed it, or live now; a confession is not valid for a business owner who is not a New York resident.

If you do make a deal with GRP Funding or NAPA, get it in writing. It should specify the total amount, dates for each payment, who is part of it, which claims are included, when the business is finally released from liability, what happens if any payment is missed, how the case is dismissed, and what legal claims GRP or NAPA is releasing in exchange. For example, is the business alone being released from the lawsuit or is it you, personally? Without all of this, a proposed settlement, in practice, is just something someone talked about.

If you have more than one MCA, be extremely careful to keep separate records for each MCA agreement. Paying or negotiating with one funder will not resolve the others. Once you file a bankruptcy petition, that will automatically stop most cases on claims from before you filed. Talk with a lawyer if you have ongoing lawsuits.

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.