Article summary
No single breaking story today, but three active threads — a NY AG fraud suit over rigged MCA arbitration, a Texas bankruptcy ruling questioning the sale-vs-loan defense, and a Senate bill easing small-business reorganizations — show where the industry is headed.
Article content
Nothing broke overnight in the merchant cash advance world, but three storylines that surfaced over the past several weeks continue to define where the industry is headed: a New York fraud suit over a "sham" arbitration service, a Texas bankruptcy ruling that keeps chipping at the sale-versus-loan defense, and a Senate bill that would make it easier for over-leveraged small businesses to reorganize.
New York AG Sues "Sham" Arbitration Service Built for MCA Funders New York Attorney General Letitia James filed suit against Rapid Ruling, an online arbitration platform, and its founders Zachary Meyer and Andrew Sachs, alleging the service was created in coordination with an MCA company to rig arbitration outcomes in funders' favor.
According to the Attorney General's office, an investigation found that in roughly 97% of the roughly 3,000 arbitrations Rapid Ruling handled in its first three years, the small business never appeared — and Rapid Ruling ruled for the MCA company that initiated the case in nearly all of them.
The suit seeks restitution and damages for affected merchants, civil penalties, and an order barring the defendants from continuing the practice.
(ag.ny.gov; Fingerlakes1.com) Texas Bankruptcy Court Lets Usury Claim Against an MCA Funder Move Forward In Sommers v.
Global Merchant Cash, Inc.
(In re Anadrill Directional Services, Inc.), Chief Bankruptcy Judge Eduardo V.
Rodriguez of the U.S.