UCC Lien Attorney
A UCC lien, or a Uniform Commercial Code lien, is something creditors use as a safety net. When your business receives money from a merchant cash advance lender, the lender might slap a UCC lien on your business assets. They then have a legal right to repossess those assets if you default on the loan.
Businesses often end up with UCC liens when they’re facing dire financial straits. While they’re sometimes a necessity, these liens can hold your business back over the long term, especially if not removed in a timely manner.
In the case of a merchant cash advance-based UCC lien, the lien may be against the accounts receivable of your company. That allows a debt collector to contact your clients and customers to recover the money owed. And that is an absolutely devastating action for your business. Call 347-588-5590 or email for a free consultation.
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There May Already Be A UCC Lien On Your Company
If you’ve taken out a merchant cash advance (MCA), your creditor likely served a Uniform Commercial Code (UCC) lien on your customers or payment processors. At this point, the MCA company has shut your company down. The MCA company is trying to choke you into submission. But there are ways to fight back. As an experienced litigator with almost 20 years of courtroom experience, Dominick Dale, Esq. will not permit your business to get choked out. As my client, we will devise a legal strategy to fight back.
At Merchant Cash Advance Law Firm P.C., attorney Dominick Dale has built a reputation in New York as a strong, determined litigator for businesses with MCA problems. His hard-working, unflinching attitude is a major relief to business owners across the state of New York. He will be aggressive in protecting your company and your livelihood.
Understanding a Blanket Lien
When financial challenges hit from a merchant cash advance debt, this unregulated agreement can transform into aggressive collection actions, such as enforcing a blanket lien. The severity of a blanket lien action can be daunting, but legal strategies can help protect your company’s future.
Filed as a UCC-1 financing statement, a blanket lien gives the lender a priority claim on all your business assets, including bank accounts, receivables and inventory. Its enforcement can give the lender the power to disrupt your operations.
- File a counterclaim against lien validity or lender breach
One key action in an aggressive defense is challenging the lien’s perfection or the lender’s conduct. It is crucial to check the UCC-1 filing for errors, which may invalidate the lien. Alternatively, you can file a counterclaim alleging the lender breached the contract by demanding the wrong repayment amount. Another breach can involve failing to reconcile payments when business revenue declines if the contract contains a reconciliation clause. - Challenge the lien by exposing misleading promises
Meanwhile, the lender may have told you that the lien is just for receivables, only to discover their claim on all assets. Thus, it is vital to challenge the UCC lien by exposing misleading clauses that improperly claim assets never intended as collateral, such as equipment and inventory. - Negotiate a settlement and ask for a UCC-3 release
In addition, the lender may prefer a guaranteed recovery over a long and costly legal battle. Through negotiation, leveraging defenses and flaws in the lender’s case can help in proposing a reduced settlement. The goal of this negotiation is to secure a UCC-3 termination statement to remove the blanket lien from your record.
The Risks of UCC Liens To Your Business
UCC liens are not just a piece of paper. They come with real risks that can affect your business in several ways. Here are a few examples of how they could hold you back from achieving your business’s highest potential:
- Cash flow crunch: With a lien in place, it could be harder to get more financing. When other potential lenders see that someone else has a priority claim on your assets, they will be less likely to give you more credit, or to do so on favorable terms.
- Loss of control over your assets: The assets tied up in the lien can’t be sold without first satisfying the debt. This can limit your ability to make business moves.
- Credit score hit: Just like personal credit, your business credit can suffer if you have a lien against it and fail to make timely payments. A poor business credit score can have a huge impact on future financial dealings.
In many cases, the benefits of securing financing with a UCC lien outweigh the downsides, but it’s important to carefully weigh these considerations before proceeding.
3 Key Issues in UCC Lien Disputes And Litigation
The Uniform Commercial Code (UCC) governs secured transactions in the United States. Using UCC liens is a common way lenders secure repayment of merchant cash advances (MCAs) from businesses. However, disputes can arise when lenders and borrowers disagree.
These disputes can worsen into litigation, putting the borrower’s business at risk. To navigate these UCC lien disputes, it is essential for borrowers to know the key issues that often arise.
- Priority of liens: One key issue is the priority of liens. When multiple lenders have liens on the same collateral, the priority of the liens can be disputed. According to the UCC, the first lender to perfect a lien generally has priority over subsequent lenders.
- Validity of the lien: Another key issue is the validity of the lien. The borrower may argue that the lender did not properly file the lien. The UCC requires lenders to properly perfect their security interest. If a lender fails to file a UCC-1 financing statement and does not comply with other UCC requirements, the lien may be invalid.
- Amount of the lien: Finally, a third key issue is the amount of the lien. The lender may claim the borrower owes more than the borrower believes is owed. Further, UCC lien disputes can be complex and require analysis to determine the correct amount owed.
UCC lien disputes can have serious consequences for a business. The borrower’s ability to operate the business may be at risk. By seeking advice from a legal advocate, the borrower may better navigate the complexities of UCC lien disputes and litigation. With legal guidance, they may also assert their rights and fight for a favorable outcome.
Did The Lender Dot Every i and Cross Every t On The UCC-1 Form?
When the lender in a merchant cash advance or other loan uses the debtor’s accounts receivable account as collateral, it must submit a form called the UCC-1 to the local secretary of state’s office. This “perfects” the lien and makes it easier for the lender to seize the account or any other property securing the loan.
The UCC-1 form is short, usually only one page long. It is supposed to contain the terms of the cash advance or loan, though precise detail is not necessarily required. But there is one thing that the lender must get 100% exactly right: the name of your business.
This means that the advancer must write down the debtor business name exactly as it appears on its charter or other foundational documents. This includes seemingly “minor” details like punctuation, spacing, and capitalization. For UCC-1 purposes, “ABC Gizmos, Inc.” is not the same as “ABC Gizmos Inc.” or “Abc Gizmos, Inc.” Nor can the lender substitute the debtor’s DBA or trade name. Only the name exactly as written in the foundational documents will do. This is because the UCC-1 serves as notice to the public of the transaction for which the lien is required. Anybody, such as another potential lender, is considered to be on notice regarding whom they contact to find out more details — but only if the debtor’s name is recorded accurately.
While mistakes on the UCC-1 are not common, an error in your business’s name could change how you deal with a UCC lien. A conversation with attorney Dominick Dale who defends businesses against UCC liens should clarify your position.
The Key Role of Documentation in a UCC Lien Collection Dispute
Business owners facing aggressive UCC lien collection tactics can often feel overwhelmed and stressed. The financial strain can be significant, and the situation can seem hopeless. If you are a business owner contemplating filing a dispute against a lender’s collection tactics, how can documentation help your case?
Types of documentation to gather
Having thorough documentation in your UCC lien collection dispute can help you prove the extent of the harm that the lender’s collection tactics caused to your business. Among the types of documentation to gather are:
- UCC financing statement: If you have not received this, request a copy from the lender. This is the public notice of their security interest in your business’s assets. Reviewing the UCC financing statement can help you spot inaccuracies and know the priority of the lien.
- Proof of all payments: Keeping a record of the amounts you gave to the lender can prevent them from making false claims about your merchant cash advance (MCA) payments.
- Communication with the lender: Your communication with the lender, including emails, letters, call logs and text messages, can help you establish a pattern of their behavior. This can also contradict the lender if they make inaccurate statements about your conversations.
- Signed agreements: All the agreements you signed with the lender can help you clarify the terms of the transaction. Having these can also prevent the lender from making misleading claims about your MCA.
Additionally, it is important to gather the notices the lender sent to your suppliers and the documentation of their communication. These documents can help you prove the lender’s aggressive approach to collection.
How To Remove A UCC Lien
Merchant cash advance attorney Dominick Dale will develop legal strategies to resolve the UCC Lien. The problem is many merchant cash advance companies can be slow to remove the liens they place. That, in turn, means you must act. Let me guide you in removing a UCC lien.
Free 30-Minute Consultation About Your UCC Lien
When dealing with the legal and logistical complexities of a UCC Lien, missteps and delays are the last thing you want. Attorney Dominick Dale moves fast to secure your goals and helps build a plan with you to get out from under the difficulties of any MCA-related issues.
He’s ready to get to work for you. Reach out to learn more by phone at 347-588-5590 or send an email using this form. He handles UCC Liens for businesses nationwide.