Gene Rosen won a landmark victory for the MCA industry in Bankruptcy Court on August 15, 2018.
In Gecker v. LG Funding, LLC, after a trial in an adversary proceeding in the United Stated Bankruptcy Court for the Northern District of Illinois, Judge Jacqueline P. Cox issued a lengthy Memorandum Opinion granting judgment in favor of LG Funding, LLC, an MCA funder, dismissing all counts for preferential transfers, fraudulent transfers, and disallowance of claims. A Chapter 7 Bankruptcy Trustee had sued LG and many other MCA funders claiming the MCAs were usurious loans and that the receivables the funders were paid constituted fraudulent and preferential transfers that had to be returned. The significance of this victory is that this is the first reported case in the country addressing the issue of whether payments made pursuant to an MCA must be returned as fraudulent or preferential transfers. The victory also signals a sign of relief for the numerous other MCA funders preparing to proceed to trial with the Trustee in their own cases. The Memorandum Opinion is available online on Public Access to Court Electronic Records (PACER) under United States Bankruptcy Court for the Northern District of Illinois, Adversary No. 17-72, Doc. No. 62. Gene Rosen’s Law Firm represents MCA funders in all types of litigation and arbitration in New York, New Jersey, Connecticut, and bankruptcy courts throughout the United States (subject to each bankruptcy court’s local rules for admission or admission pro hac vice).