9 Terms in Your Wynwood Capital Group Agreement That Matter Once Suit Is Filed

At first it looks like getting served is the end of the argument, but it is really the start. The complaint will say you defaulted and now owe the balance plus maybe other fees. If you personally signed on as a guarantor, they could go after you. That is the funder’s version of the story, and they still have to prove it. An MCA agreement gives rise to defenses ordinary loans don’t, and knowing those makes the difference. What usually decides the case are a few terms in the contract itself. Once you are sued, nine terms from your Wynwood agreement, from how you were served to your deadline to answer, can change the rest of the case.

1. The service clause

Odds are the clause says you are OK with Wynwood mailing you papers to start a lawsuit. It doesn’t mean they actually did it, or did it right. In 2024, a Brooklyn judge reportedly dismissed one such case because Wynwood didn’t prove personal jurisdiction over the defendants. According to the judge, Wynwood couldn’t rely on the defendant’s agreement to accept process by mail because it was not proven to be executed. If you can argue Wynwood didn’t properly serve you, you could defeat the case.

2. The list of defaults

An MCA allows the funder to call the entire balance due early upon certain defaults. The agreement has a list of reasons the funder could call a default. Check if Wynwood brought up the right reason(s). If the funder is not relying on the right clause or list item, or if it can’t prove that you did what it accuses you of, the case could fall apart.

Find where the contract talks about shutdowns and slowdowns. Many businesses miss a payment or two. Some deals say a missed or returned payment, by itself, is not a default. Many also say a shutdown or slowdown for ordinary business reasons is not a default. Check the list, see if you can make the argument, and get legal help if you’re not sure.

3. The reconciliation clause

The fixed daily debit is not carved in stone forever. The reconciliation clause comes up if you sold less than expected, but got debited based on the higher, projected amount. Keep a careful paper trail for all reconciliation claims you send.

Check your agreement about how to bring up reconciliation. According to a 2022 court ruling in a separate case, a merchant had to ask Wynwood for a reconciliation; Wynwood did not have to offer it. Under that deal, an emailed reconciliation request is effective only if Wynwood acknowledges the email, per a defense firm reporting it.

4. The term and bankruptcy clauses

A judge could decide an MCA is really a loan in disguise. That could have a big effect on how your dispute plays out. Reconciliation, the set repayment term, and a bankruptcy carveout are three clues to distinguish an MCA from a loan. A 2020 case in New York’s Appellate Division, LG Funding, weighed all three. Check if you signed a deal for a finite term. If so, your deal may be closer to a loan. Also look to see if the agreement lets Wynwood get its money back if you declare bankruptcy. Bankruptcy-proof deals are more likely to be called loans. But it’s not automatic - some courts decide the other way.

5. The effective rate

If the contract is actually a loan, check the rate on the contract. In New York, if the judge calls it a loan, and the rate is above the 25% state limit for criminal usury, the entire agreement is void - the lender can collect neither the principal nor the interest. For a company, New York law says you can use it as a defense only, and can’t file your own claim. But the usury defense is so complex, it’s like a separate case in itself. Start by proving the actual rate.

A contract with a high rate doesn’t automatically void the contract. In a 2022 Wynwood case, according to a defense firm’s summary, a New York judge denied the funder’s summary judgment request, seeing a possible usurious loan.

6. The fee schedule

The complaint will likely add on default fees, non-payment fees, returned-payment fees, and attorney’s fees if the contract lets Wynwood do that. A funding contract may list fixed default fees and a set percentage for attorney’s fees. Start by seeing if the court complaint and the bank statements have the same bottom-line numbers. Look to see if Wynwood added the wrong amount, or the right amount in the wrong way. If you argue that they charged a penalty in disguise, show which fee is not allowed, what the contract says about it, and why the fee should not count.

7. The personal guarantee

If Wynwood named you as a personal defendant, it’s usually because of a guarantee. Many deals have the owners personally guarantee certain things, like keeping the bank accounts open. Others guarantee payments. Check for two things - what did you personally promise, and do you have to pay if the deal is void.

8. The confession of judgment

A confession of judgment clause is often slipped into the fine print. It makes it possible for Wynwood to ask the court for a judgment against you before it makes its case or you answer it. In New York, the law only lets it be filed where you personally lived when you signed it or at the time Wynwood filed it. The rules are different if you’re in the case as a company. In that case, it can be filed in the county where the company has a place of business. And a confession works only if it’s dated within three years before filing. Florida takes confessions of judgment seriously. A law there voids any power of attorney to confess judgment signed before suit is filed, even outside Florida.

9. The deadline to answer

In New York, if the complaint against you is handed to you in person, you generally have 20 days to answer. If you’re served anywhere else, such as by mail, that could be 30 days. Getting regular phone calls from Wynwood’s reps, by itself, won’t stop the clock. If you miss that deadline, Wynwood can ask the court to enter a judgment against you without hearing your side. Such a judgment is not written in stone.

In New York, you could still ask to vacate it if you have a good excuse. The request should generally be made within one year after notice that the judgment was entered. In some cases, courts have set aside judgments in the interest of justice, including when the judgment appears to be based on an usurious loan.

A case like this involves a lot of moving parts. To sort them out, you need the complaint, the contract, any guarantee, bank statements, reconciliation requests, and emails. Run them by a lawyer before moving accounts, redirecting receivables, or signing any other advance.

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.