Gene Rosen’s Law Firm won another victory for the MCA industry in Bankruptcy Court on November 9, 2018.
In Official Committee of Unsecured Creditors v. LG Funding, LLC, in an adversary proceeding in the United States Bankruptcy Court for the District of Nebraska, Judge Thomas L. Saladino issued an Order denying a motion for summary judgment that the Creditors’ Committee made against LG Funding, an MCA funder. The Creditors’ Committee sought a ruling that payments made pursuant to an MCA in the 90 days leading up to a bankruptcy filing are preferential transfers. Although a defense to such claims is that the payments were made in the ordinary course of business, the Creditors’ Committee argued that the defense was not applicable because MCAs involve exorbitantly high interest payments. In denying the motion, the court ruled that the MCA at issue was not a loan. This ruling should discourage others from trying to assert similar claims against funders in the future. The Order is available online on Public Access to Court Electronic Records (PACER) under United States Bankruptcy Court for the District of Nebraska, Adversary No. 17-4051, Doc. No. 23. Gene Rosen’s Law Firm defends MCA funders in bankruptcy court adversary proceedings for fraudulent and preferential transfers all across the United States (subject to each bankruptcy court’s local rules for admission or admission pro hac vice).