MCA Stacking Lawsuit Defense: What to Do When a Funder Says You Breached a Non-Stacking Clause

Updated September 30, 2026 · Legally reviewed by Credible Law Editorial Team· Credible Law

Short answer Most merchant cash advance contracts contain a non-stacking clause (also called an anti-stacking or “additional financing” covenant). Taking a second advance without the first funder’s written consent is usually listed as an event of default, which the funder uses to demand the entire unpaid balance at once.The allegation matters more than it looks. Many MCA personal guaranties are “guaranties of performance” that only make the owner liable if the business breaks a promise. A slow month is not a broken promise; stacking is. That is why stacking claims so often land on the owner personally.A stacking claim is still a claim the funder has to prove. The main defenses are whether the clause actually covered what you did, whether the funder knew and funded anyway, whether the default provisions make the deal a disguised loan, whether a separate fraud claim is properly pleaded, and whether the forum and remedies are enforceable.Answer deadlines are short (often 20 to 30 days in New York state court). Do not respond by taking another advance, moving money, or signing a funder’s “reaffirmation” that admits the breach.

The complaint arrives, and the words are not the ones most owners expect. It does not only say the business stopped paying. It says the business “entered into additional financing in violation of Section 2.10” or “stacked a subsequent merchant cash advance without consent,” and it names the owner personally as a guarantor. Sometimes it adds a count for fraud, claiming the owner lied on the application about how many advances the business already had.

This guide explains that specific lawsuit: what a non-stacking clause is, how funders turn it into several different claims, and which defenses fit which claim. It is written for business owners, personal guarantors, and bookkeepers who need to understand the landscape before they talk to counsel.

Credible Law is a national legal resource and referral network, not a law firm. We connect business owners with independent attorneys who handle merchant cash advance disputes. This page is general information, not legal advice.

Related but different questions are covered elsewhere. To estimate what two overlapping advances cost your cash flow, use the MCA stacking calculator. If several funders are collecting at once and you are weighing Chapter 11, see multiple MCAs and bankruptcy. For lowering payments when sales drop, see MCA reconciliation rights. This page focuses on one thing: defending the stacking allegation itself.

Key takeaways A non-stacking clause is a promise between you and the first funder. It does not make the second deal void; under UCC § 9-401(b), an agreement that makes a transfer a default does not prevent the transfer from taking effect. It gives the first funder a breach claim against you.Funders usually plead stacking four ways: breach of the merchant agreement, breach of the owner’s guaranty, fraud in the application, and, if a bankruptcy follows, a claim that the debt cannot be discharged.Whether the clause was breached depends on its exact wording. Some clauses reach only financing tied to receivables; others reach any “additional financing” at all.Funders often fund with full knowledge of existing positions: the prior debits sit on the bank statements they reviewed, and some advances pay off an earlier funder directly. That record is central to waiver, estoppel, and reliance defenses.New York courts ask whether the funder was “absolutely entitled to repayment under all circumstances.” Broad default triggers are part of that analysis, and a criminally usurious loan is void under New York law.

What a non-stacking clause actually says

“Stacking” is industry shorthand for taking a new merchant cash advance while an earlier one is still being collected. The contract language that prohibits it is rarely labeled that way. It usually appears in three places, and a stacking complaint often cites all three.

• A covenant in the “representations, warranties and covenants” section, promising not to enter into additional financing without written consent. One agreement filed as an exhibit in a federal bankruptcy seminar reads, in substance, that the merchant will not enter any arrangement for additional financing, “whether in the form of a purchase of receivables or a loan,” with anyone else without the funder’s written permission (W.D. Va. Bankruptcy Seminar materials, 2025).
• A negative pledge in the security agreement, promising not to allow any other lien or cash advance against the collateral. Some agreements add that any later lender “may be tortiously interfering” with the funder’s rights, which is aimed at the second funder, not you.
• An application representation stating how many other advances or loans were open when you applied, often repeated on a recorded “funding call.”

The wording controls the analysis, and the differences are real:

Common non-stacking clause drafting and what it tends to reach

Clause type	Typical language	What it may not reach
Receivables-only	No other advance or loan that “relates to or involves” or “pledges or encumbers” the merchant’s receivables	Financing not secured by or repaid from receivables, depending on the definitions (for example, some equipment financing or unsecured credit)
Broad “additional financing”	No additional financing of any kind, whether a purchase of receivables or a loan, without written consent	Ordinary trade payables are sometimes carved out expressly; anything else is argued from the definitions
Daily-payment clause	No other obligation that “requires daily payments”	Weekly or monthly obligations, if the clause is read literally
Negative pledge	No lien, security interest, or encumbrance on the collateral	Unsecured obligations, if no lien was granted
Application representation	Statement of all open MCA or loan balances as of the application date	Anything after the application date; it is a snapshot, not a continuing promise, unless the contract says otherwise

Two practical points follow. First, pull every page of the agreement, including the security agreement and the guaranty, because the definitions that decide the case are often in a different document from the covenant. Second, identify the timeline: which advance came first, what was open on the application date, and whether the later advance paid off an earlier one. A second funder that pays off the first position at closing is a refinancing, not a stack, as to the funder that was paid.

How a stacking allegation turns into four different claims

A single second advance can generate several legal theories against different defendants. Knowing which ones are actually pleaded tells you what the funder must prove and which defenses matter most.

How funders plead stacking, and where each claim is weakest

Claim	Against	What the funder has to show	Where defenses focus
Breach of the merchant agreement (event of default)	The business	A valid contract, a covered financing, no consent, and the amount actually owed after acceleration	Clause scope; consent or waiver; the acceleration math; recharacterization and usury
Breach of the personal guaranty	The owner or owners	That the guaranty covers this covenant and that the business breached it	Guaranty wording; the underlying breach; defenses that carry through from the business
Fraud or fraudulent inducement	The owner, sometimes the business	A false statement of present fact, made knowingly, justifiably relied on, causing loss, pleaded with particularity	Duplication of the contract claim; what the funder already knew; whether a statement was actually false
Nondischargeability (in bankruptcy)	The owner; in some circuits, the business in Subchapter V	The elements of 11 U.S.C. § 523(a)(2), (4), or (6), including a written statement for financial-condition misstatements	Writing requirement; reasonable reliance; intent to deceive

A fifth dispute sometimes runs alongside yours: the first funder suing the second funder for tortious interference with contract. You are not the defendant in that claim, but your records and testimony will be sought, and the funders’ positions can help or hurt you. That dispute is covered further below.

Why a stacking claim hits the owner personally

Most MCA agreements insist they are purchases of future receivables, not loans. To support that label, many use a “guaranty of performance” rather than a guaranty of payment. The guaranty in the seminar exhibit cited above says so directly: it is not an absolute personal guaranty of payment, and the owners are only guaranteeing they will not take, or let the business take, an action that breaches the agreement.

That structure cuts both ways. If a business simply earns less and cannot keep up, a performance guaranty may not be triggered, because nothing was promised about revenue. But a second advance taken in violation of a covenant is a breach of a promise, and the guaranty attaches to it. In practice, the stacking allegation is often the funder’s route from the business’s bank account to the owner’s house, personal accounts, and wages.

This is also why owners are sometimes surprised to be sued personally when the business is still open. Read the guaranty against the covenant the funder says was broken. If the guaranty lists specific “bad acts” and stacking is not among them, or if the business never breached the covenant as written, the personal claim may fail even if the business claim survives. See MCA personal guarantee defense for the broader analysis.

Defenses to an MCA stacking lawsuit

No single argument wins every stacking case. The defenses below work together, and counsel will usually plead several at once so none are waived. For a general map of MCA defenses beyond stacking, see merchant cash advance legal defenses.

1. The clause did not cover what you did

Start with the words. If the covenant only prohibits financing that “pledges or encumbers” receivables, an unsecured obligation may fall outside it. If it only prohibits obligations requiring “daily payments,” a weekly-pay product is arguable. If the later transaction paid off the earlier funder at closing, the paid funder has no stack to complain about. And if the earlier advance was already open, and disclosed, when the later funder signed, the later funder’s covenant was not breached by something that pre-dated it.

Ambiguity matters too. Form agreements drafted by the funder are generally read against the drafter when the language is genuinely unclear, although courts will not rewrite clear terms.

2. The funder knew, consented, or funded anyway

MCA underwriting typically relies on recent bank statements. Existing funders’ daily debits appear on those statements, and UCC searches reveal earlier financing statements. Many advances are “net funded,” with part of the proceeds wired straight to an earlier funder. Brokers often shop a file to several funders at once and describe every open position.

When the record shows the funder knew about a position and funded anyway, or approved a later advance by email, three related defenses come into play:

• Consent. Many clauses bar additional financing “without written consent.” An email approving a payoff or a later position may be that consent.
• Waiver and estoppel. A funder that knowingly accepts payments for months after learning of another position may have a harder time declaring default on that basis later. Most agreements include a “no waiver” clause, which courts generally enforce, so this argument depends heavily on the facts.
• Reliance. For any fraud claim, a funder that had the bank statements showing another funder’s debits will struggle to show it justifiably relied on an application that omitted it.

This is the reason the underwriting file matters so much: the application, the bank statements the funder received, the recorded funding call, the broker’s submission emails, and any payoff letters. Counsel can demand them in discovery.

3. The default and the amount demanded

Even where a covenant was breached, the funder still has to prove what it is owed. Stacking complaints commonly demand the full “uncollected purchased amount,” default fees, “blocked account” fees, and attorney’s fees. Check:

• Whether the agreement requires notice or an opportunity to cure before acceleration, and whether it was given.
• Whether every payment, including payments made after the alleged default, was credited.
• Whether flat default fees bear any relationship to actual loss. Charges that operate as a penalty rather than a reasonable estimate of damages are open to challenge.
• Whether the funder kept debiting the account after declaring default, and whether those debits were applied.

4. The stacking default as evidence of a disguised loan

This is the defense with the highest stakes. Under New York law, which most MCA agreements choose, usury requires a loan. In LG Funding, LLC v. United Senior Properties of Olathe, LLC, 181 A.D.3d 664 (2d Dep’t 2020), the Appellate Division said courts ask whether the funder is “absolutely entitled to repayment under all circumstances,” and usually weigh three factors: whether there is a reconciliation provision, whether the agreement has a finite term, and whether the funder has recourse if the merchant goes bankrupt. The court let the merchant’s criminal usury defense proceed where reconciliation was at the funder’s sole discretion and insolvency-type events triggered full repayment.

Stacking fits into this analysis in a specific way. Funders argue that a default for stacking is a default for the merchant’s own misconduct, not a guarantee against poor sales, so it does not convert the deal into a loan. Merchants argue that when the list of default triggers is so broad that almost any financial strain (a second advance, an insufficient-funds return, a change of bank) lets the funder demand everything immediately, the funder was never really bearing the risk of low revenue. Federal courts in the Southern District of New York have examined the breadth and mechanics of default provisions in allowing usury-based claims to proceed, for example in Haymount Urgent Care PC v. GoFund Advance, LLC, 609 F. Supp. 3d 237 (S.D.N.Y. 2022), and the Second Circuit affirmed a judgment treating an MCA as a criminally usurious loan in Fleetwood Services, LLC v. Richmond Capital Group LLC, No. 22-1885 (2d Cir. June 8, 2023) (summary order).

The consequences can be decisive. New York’s criminal usury threshold is 25 percent per year (N.Y. Penal Law § 190.40). A corporation or LLC cannot raise civil usury, but it can raise criminal usury as a defense, and in Adar Bays, LLC v. GeneSYS ID, Inc., 37 N.Y.3d 320 (2021), the Court of Appeals held that a loan proven to be criminally usurious is void. Two cautions: courts decide this contract by contract, and LG Funding also held that criminal usury is available as an affirmative defense but not as a counterclaim. For the full New York framework, see MCA disguised loan defense in New York and merchant cash advance usury red flags.

Regulators have pressed the same substance-over-label point. In January 2025 the New York Attorney General announced a judgment and settlement exceeding $1 billion with Yellowstone Capital and affiliated companies, alleging they made high-interest loans disguised as merchant cash advances; the settlement canceled more than $534 million in merchant debt (NY AG announcement).

5. Fraud claims based on the application

Many MCA agreements warn in bold that any misrepresentation “may constitute a separate cause of action for fraud.” Funders use that warning to add a fraud count when an application understated open positions. Fraud is a serious allegation and should be taken seriously, but it is also harder to prove than breach of contract:

• Duplication. New York generally dismisses a fraud claim that merely restates a breach of contract claim and seeks the same damages. A fraud claim can survive when it rests on a misrepresentation of a then-present fact collateral to the contract, which is why funders focus on the application rather than the covenant.
• Particularity. Under CPLR 3016(b), the circumstances of a fraud must be stated in detail. Vague allegations that the owner “concealed” other financing are open to challenge.
• Falsity and knowledge. Was the statement false when made? A position opened after the application date, or a balance that was disclosed to the broker, changes the answer.
• Reliance. As noted above, a funder that saw the other funder’s debits on the statements it reviewed may not have relied on the omission at all.

If a fraud claim is pleaded, the owner should have counsel before giving any sworn statement, affidavit, or deposition testimony about the application.

6. Forum, confession of judgment, and state-law limits

Stacking suits follow the same procedural path as other MCA cases, and the same threshold defenses apply. New York’s CPLR 3218, as amended in 2019, requires a confession of judgment to be filed in the county where the defendant resides, which effectively shut the door on New York confessions against businesses with no New York place of business. Some states go further: Virginia’s sales-based financing law requires in-state forums and bars confession-of-judgment provisions (Va. Code § 6.2-2234), and Texas voids them for covered transactions. See MCA venue clause defense and confession of judgment.

Accused of stacking? Get the agreement reviewed before you answer. A short call can identify which clause the funder is relying on, whether your guaranty actually reaches it, and which defenses must be raised in your first filing so they are not waived. Have ready: every MCA agreement and guaranty, the complaint, your bank statements since the first advance, and any broker emails. Call 888-201-0441   |   Request a free case review Credible Law is a referral network, not a law firm. No attorney-client relationship is formed by contacting us. Attorney Advertising.

When the first funder goes after the second funder

A non-stacking clause binds only the parties to it. The second funder never signed the first funder’s agreement, so the first funder’s theory against it is usually tortious interference with contract: that the second funder knew of the non-stacking clause, intentionally induced the breach, and caused damages. In one widely reported Maryland case, RapidAdvance v. Pearl Capital (Cir. Ct. Montgomery County), the trial court reportedly denied the second funder’s motions to dismiss and for summary judgment on that theory in 2017. Tortious interference standards vary by state, and these cases are fact-driven.

What this means for you:

• The second deal still exists. Under UCC § 9-401(b), a clause making a transfer a default does not stop the transfer from taking effect. You owe both funders under their own contracts, subject to your defenses against each.
• Priority is separate from breach. Between competing security interests in the same collateral, the first to file or perfect generally has priority under UCC § 9-322. That affects who gets paid first from receivables; it does not settle whether you breached.
• Your records will be sought. Expect subpoenas for broker communications and applications. See MCA out-of-state subpoena defense if they arrive from another state.
• The second funder’s own clause. The second agreement almost always has its own non-stacking and cross-default provisions. A default on one position can cascade. The practical side of that cascade is covered in multiple MCAs and bankruptcy.

Stacking allegations in bankruptcy

A bankruptcy filing triggers the automatic stay under 11 U.S.C. § 362, which halts the collection lawsuit against the filing debtor. It does not automatically protect a non-filing owner on a personal guaranty. And a stacking allegation can follow the owner into an individual bankruptcy as a claim that the debt should not be discharged.

• Written financial statements. 11 U.S.C. § 523(a)(2)(B) excepts from discharge a debt obtained by a materially false written statement about the debtor’s or an insider’s financial condition, on which the creditor reasonably relied, made with intent to deceive. Funders use it for applications that understated open advances.
• Oral statements. In Lamar, Archer & Cofrin, LLP v. Appling, 584 U.S. 709 (2018), the Supreme Court held that a statement about a single asset can be a statement “respecting the debtor’s financial condition,” which must be in writing to support nondischargeability. That makes the difference between a signed application and a recorded phone call legally significant.
• Reasonable reliance is an element of the written-statement exception, which brings back the underwriting-file evidence discussed above.
• Subchapter V businesses. Under 11 U.S.C. § 1192, the Fourth, Fifth, and Eleventh Circuits have held that § 523(a) exceptions apply to corporate debtors that confirm a nonconsensual Subchapter V plan. The Fifth Circuit case, Avion Funding, L.L.C. v. GFS Industries, L.L.C. (5th Cir. 2024), was brought by an MCA funder. The Ninth Circuit Bankruptcy Appellate Panel and a number of bankruptcy courts disagree, so where the case is filed matters.

For the process itself, see Subchapter V bankruptcy.

State snapshot: rules that change a stacking case

Selected state rules relevant to stacking disputes (general information; confirm with local counsel)

State	Rule	Why it matters in a stacking case
New York	Criminal usury at 25% is a defense for business borrowers (Penal Law § 190.40; Adar Bays); CPLR 3218 limits confessions of judgment to the defendant’s county	The usury analysis is where broad stacking defaults are tested; out-of-state businesses have strong COJ arguments
Texas	Finance Code chapter 398 (HB 700, effective Sept. 1, 2025) voids confession-of-judgment provisions for covered commercial sales-based financing and limits automatic debits to providers holding a perfected first-priority security interest in all accounts receivable; enforcement is by the OCCC	A second-position funder may not be entitled to automatic debits at all under a covered contract; see our Texas OCCC registration guide
Virginia	Va. Code § 6.2-2234: in-state forum for sales-based financing disputes, no confession of judgment, arbitration limits	A New York stacking suit against a Virginia merchant faces a forum argument from the start
California and Florida	Commercial financing disclosure laws enforced by state regulators, not by private lawsuits	Disclosure violations rarely defeat a stacking claim directly but can support regulatory complaints and negotiation

For every state’s commercial financing rules, see merchant cash advance laws by state.

Evidence to gather now

Stacking cases are won and lost on the timeline and the underwriting file. Gather these before your first call with counsel:

• Every merchant cash advance agreement, addendum, renewal, security agreement, and guaranty, for every funder, with the date each was signed and funded.
• Every application you signed and any written list of open positions you provided.
• Bank statements from 90 days before the first advance through today, with each funder’s debits marked.
• Funding confirmations, payoff letters, and “net funding” statements showing money wired to another funder.
• All emails and texts with brokers and funders, especially any mention of other positions, consolidations, or consent.
• UCC search results for your business (your Secretary of State’s online search).
• Reconciliation requests and responses, default notices, and records of every debit taken after a default was declared.

How to respond to an MCA stacking lawsuit: an eight-step plan

This is a framework to discuss with counsel, not a do-it-yourself procedure. A business entity generally must appear in court through an attorney.

1. Calendar the answer deadline. In New York Supreme Court, it is generally 20 days after personal delivery and 30 days after other forms of service are complete. Missing it invites a default judgment; see MCA default judgment defense.
2. Identify every claim and defendant. List which counts are pleaded (contract, guaranty, fraud) and who is named. The defenses differ for each.
3. Build the position timeline. Put every advance on one line: signed, funded, paid off, defaulted. This single page drives most of the defenses.
4. Read the clause, the definitions, and the guaranty together. Confirm whether the conduct alleged is covered and whether the guaranty reaches it.
5. Request the underwriting file. The application, the statements the funder reviewed, the funding call recording, and broker submissions.
6. Plead every applicable defense in the answer. Usury, waiver, estoppel, lack of reliance, penalty, and forum defenses can be waived if they are not raised.
7. Coordinate across funders. A settlement with one funder can trigger claims by another. Resolve positions in an order that does not create new defaults.
8. Decide the larger strategy. Litigate, negotiate a merchant cash advance settlement, or evaluate bankruptcy, with the personal guaranty exposure in view.

Mistakes that make a stacking case worse

• Taking another advance to cover the lawsuit. It is a new breach under every existing agreement and a new position to defend.
• Moving money or opening accounts to dodge debits without advice. Transfers designed to put assets beyond creditors’ reach invite fraudulent-transfer claims and, after judgment, contempt. See can an MCA seize assets.
• Signing a “reaffirmation” or forbearance that includes a statement admitting the stacking breach or waiving defenses.
• Giving a recorded statement to either funder’s collections team about what you disclosed and when.
• Relying on a non-lawyer debt relief company to answer a lawsuit. Funders have sued settlement firms for tortious interference with MCA contracts, and a business entity cannot be represented in court by a non-lawyer.
• Blocking all debits without a plan. A separate issue with its own consequences; see how to stop MCA ACH withdrawals immediately.

An illustrative example

Consider a hypothetical Ohio restaurant group. In March it takes a $90,000 advance from Funder A. In May, a broker places a $60,000 advance with Funder B; $22,000 of Funder B’s proceeds is wired to an older Funder C balance. In August, after a slow summer, Funder A sues the business and the owner in New York, alleging breach of the additional-financing covenant, breach of the guaranty of performance, and fraud based on the March application.

Counsel’s review might show that Funder C’s balance was open in March and listed on the application, so the fraud count rests on nothing false; that Funder A’s own underwriting statements showed Funder C’s debits; that Funder A kept debiting for eleven weeks after Funder B’s debits began to appear; and that Funder A’s agreement lets it demand the full balance on eighteen different events, including any returned debit. Those facts support consent and waiver arguments, defeat reliance for the fraud count, and feed a usury defense. None of that guarantees an outcome, but it changes the negotiation. This example is simplified and does not predict any result.

Where stacking fits in the rest of your MCA case

• If you were just served: the first 48 hours after an MCA lawsuit.
• If an account is already frozen: how to stop an MCA bank levy in 24 hours.
• If a judgment exists and discovery has started: MCA post-judgment discovery.
• For the overall litigation picture: merchant cash advance lawsuit defense.

Frequently asked questions about MCA stacking lawsuits

Is taking a second merchant cash advance illegal?

No. Stacking is a contract issue, not a crime. The risk is that it breaches a covenant in an earlier agreement, which the funder can treat as a default and use to accelerate the balance and pursue a personal guarantor.

Can an MCA funder sue me personally for stacking?

Often, yes, if you signed a personal guaranty that covers the business’s covenants. Many MCA guaranties are guaranties of performance, which are triggered by a breach such as stacking even when a simple drop in sales would not trigger them. The exact guaranty wording decides the question.

What is a non-stacking clause?

It is a promise in a merchant cash advance agreement not to take additional financing, or financing tied to receivables, from anyone else without the funder’s written consent. It usually appears as a covenant, a negative pledge in the security agreement, and a representation in the application.

Does a non-stacking clause make my second MCA invalid?

Generally no. Under UCC § 9-401(b), an agreement that makes a transfer a default does not prevent the transfer from taking effect. The second agreement stands on its own; the clause gives the first funder a breach claim against you.

What if the first funder knew about my other advances?

That knowledge matters. If the funder saw other debits on the statements it reviewed, received payoff funds from another funder, or approved a later position in writing, it supports consent, waiver, and estoppel defenses and undercuts any claim that it relied on an incomplete application. Most agreements contain no-waiver clauses, so the facts need to be documented.

Can stacking be used to argue my MCA is really a loan?

It is part of the analysis. New York courts ask whether the funder was absolutely entitled to repayment and look at reconciliation, term, and recourse. Funders argue a stacking default reflects merchant misconduct; merchants argue that sweeping default triggers show the funder never bore revenue risk. If a transaction is found to be a criminally usurious loan, New York treats it as void.

Can the funder add a fraud claim for stacking?

Funders sometimes plead fraud based on an application that understated open positions. New York generally dismisses fraud claims that duplicate a contract claim, requires fraud to be pleaded with particularity, and requires justifiable reliance, which is hard to show if the funder had records revealing the other advances.

Will bankruptcy wipe out a stacking claim?

A filing stops the lawsuit against the debtor through the automatic stay. An owner’s guaranty is separate. In an individual bankruptcy, a funder may argue the debt is nondischargeable under § 523(a)(2), which for statements about financial condition requires a materially false written statement and reasonable reliance. In some circuits, those exceptions also apply to businesses confirming nonconsensual Subchapter V plans.

Can the first funder sue the second funder?

Yes. The usual theory is tortious interference with contract, alleging the second funder knowingly induced the breach. The merchant is not the defendant in that claim but is likely to be asked for records and testimony.

How long do I have to respond to a stacking lawsuit in New York?

In New York Supreme Court, generally 20 days after personal delivery of the summons and 30 days after other service is complete. Arbitration and other states have different timelines. Treat the shortest possible deadline as the real one until counsel confirms it.

Should I take a consolidation or another advance to pay the funder suing me?

Usually not without legal review. A new advance is typically another breach of every existing non-stacking clause, and some “consolidation” products are simply additional positions.

Does it matter which state my business is in?

Yes. New York usury and confession-of-judgment rules, Virginia’s forum and confession-of-judgment limits, and Texas’s restrictions on confessions and automatic debits for covered contracts can all change a stacking case.

Get matched with an attorney who handles MCA stacking claims

Stacking cases turn on documents most owners have never read side by side: the covenant, the definitions, the guaranty, the application, and the funder’s own underwriting file. An attorney who handles merchant cash advance litigation can tell you which claims are real, which are overreach, and what has to be raised in your first filing.

Credible Law is a national legal resource and referral network that connects business owners with independent attorneys who handle MCA defense nationwide. There is no cost to be matched with counsel.

Request a free case review Call 888-201-0441 or submit your information online. There is no cost to be matched with independent counsel. Call 888-201-0441   |   Request a free case review Credible Law is a referral network, not a law firm. No attorney-client relationship is formed by contacting us. Attorney Advertising.

Legal disclaimer Credible Law is a national legal resource and referral network, not a law firm, and does not provide legal advice. Reading this page or contacting us does not create an attorney-client relationship. Attorneys in our network are independent. Laws and court decisions change and vary by jurisdiction; the cases and rules described here are summarized for general information and may not apply to your situation. The example is illustrative. Attorney Advertising. Prior results do not guarantee a similar outcome.

Sources and legal authorities

• LG Funding, LLC v. United Senior Props. of Olathe, LLC, 181 A.D.3d 664 (2d Dep’t 2020)
• Adar Bays, LLC v. GeneSYS ID, Inc., 37 N.Y.3d 320 (2021)
• N.Y. Penal Law § 190.40 (criminal usury)
• N.Y. CPLR 3218 (judgment by confession)
• N.Y. CPLR 3016 (particularity in pleading)
• UCC § 9-401 (alienability of debtor’s rights)
• UCC § 9-322 (priorities among conflicting security interests)
• 11 U.S.C. § 523 (exceptions to discharge)
• 11 U.S.C. § 1192 (Subchapter V discharge)
• 11 U.S.C. § 362 (automatic stay)
• Lamar, Archer & Cofrin, LLP v. Appling, 584 U.S. 709 (2018)
• Avion Funding, L.L.C. v. GFS Industries, L.L.C., No. 23-50237 (5th Cir. 2024)
• Texas H.B. 700 (89th Leg.), commercial sales-based financing (Tex. Fin. Code ch. 398)
• Va. Code § 6.2-2234 (sales-based financing contract terms)
• New York Attorney General, Yellowstone Capital settlement (Jan. 22, 2025)
• W.D. Va. Annual Bankruptcy Practice Seminar, “Merchant Cash Advances in Bankruptcy” (2025) (sample agreement and guaranty)