Unique Funding Solutions Lawsuit: 7 Things to Do in the First 72 Hours

What the Public Record Actually Says, and What It Does Not

There is one reported decision involving this funder that is worth your time. In GMI Group, Inc. v. Unique Funding Solutions, LLC, 606 B.R. 467 (Bankr. N.D. Ga. 2019), a bankruptcy court in Georgia examined an advance agreement between the debtor and Unique Funding Solutions and concluded that the transaction was a loan rather than a purchase of receivables, and that it was criminally usurious under New York law. The court pointed to the personal guaranty, the confession of judgment, the default provisions and the remedies available on default. On the reconciliation right, at 606 B.R. 487, it held the provision illusory because the merchant could invoke it only once a month while a separate covenant required keeping a bank balance of twice the daily payment, an amount the court described as equal to 34% of daily collections, and because the agreement never specified when a reconciled payment amount took effect.

Now the part most pages like this one leave out. That decision describes the paper and the conduct in that case. It is not a finding about every agreement this funder has ever written, and it is not a ruling about yours. Contract forms get revised, sometimes several times a year, and a clause that sank one document may have been rewritten out of the next one. Your first job in the next three days is to read your own agreement and your own bank record, then measure them against what that court found persuasive. Everything below is sequenced so that a business owner reading this at eleven at night can work through it before the answer deadline gets close.

1. Work the Caption Line by Line

The name on the first page of a summons is not always the name on your agreement, and the gap between them decides who you are actually fighting. Work through the caption line by line: the exact entity suing you, whether it matches the company that wired the money, whether your business is named with the right corporate form, and whether your personal name sits there as a second defendant. Advance paper travels. Files are syndicated, sold and referred out to collection counsel, so the plaintiff can easily be a purchaser you have never spoken with. Writing down exactly what the caption says takes four minutes and every step below depends on it.

From the funder’s side, that caption is a choice with consequences. Suing in its own name means the plaintiff has to answer for its own reconciliation conduct, its own disclosures and its own contract form if the case gets to discovery. Suing in the name of a purchaser puts a layer between the original conduct and the courtroom, and it usually means the file changed hands at a discount, which tells you something real about the number the holder can live with. Naming a guarantor as a second defendant is not clerical either. That is a decision to put a personal bank account, and in some states a house, inside the lawsuit.

Two defendants means two answers, and often two different deadlines, because a company and an individual are frequently served on different days by different methods. Do not assume the earlier date governs both. Whether the guaranty itself will hold up is a separate question with its own analysis, worked through on our page on personal guarantee enforceability, and it is not a question you have to answer in the next 72 hours. What you do have to do this week is make sure nobody misses a deadline because both defendants were treated as one.

2. Date-Stamp How the Papers Reached You

The method of service, not the date printed on the summons, is what starts your clock. An individual guarantor served under C.P.L.R. §308(2) is served by delivery to a person of suitable age and discretion plus a mailing, with the two acts falling within 20 days of each other, proof of service filed within 20 days of the later act, and service complete 10 days after that filing. A New York corporation served through the Secretary of State under B.C.L. §306(b) is in a different position entirely, because service is complete when the Secretary is served, whether or not the forwarded envelope ever finds you.

So record the details while they are fresh. Who physically handed over the papers, what that person looked like, what time it happened, and at what address. New York requires the affidavit of service to describe the recipient by gender, race, hair color, approximate age, weight and height, and where a process server resorts to affixing papers to a door and mailing, the affidavit has to specify the dates, addresses and times of the attempts that justified it. An affidavit describing a person nobody at your address recognizes is a fact worth having, and it is only available to you if you wrote down what actually happened.

None of this makes the lawsuit go away, and refusing to accept papers or throwing them out helps the other side rather than you. What service defects do is create a route back into a case you would otherwise have lost by default, and they occasionally shift where the case is heard. The recurring failure patterns, including what the affidavit is required to contain and what a GPS-logging requirement does to a server’s story, are collected on our page on process server errors in MCA suits.

3. Put the Answer Date on a Calendar, Not in Your Head

In New York state court, the time to serve an answer is 20 or 30 days depending on how service was made, under C.P.L.R. §3012(a) and (c). In federal court the period is 21 days after service under Fed. R. Civ. P. 12(a)(1)(A)(i). Those are short windows, and they are shorter than they look, because retaining counsel, getting the agreement and statements together and drafting a real answer with defenses takes most of the period. A business that waits until day 18 to start calling lawyers has effectively chosen a rushed answer or a default.

Understand what the funder gains if you miss it. A default judgment converts a contested claim into a fixed number that accrues post-judgment interest at 9% a year on a business debt in New York, and it unlocks a restraining notice under C.P.L.R. §5222(b), which can hold twice the amount due in your accounts and binds a third-party garnishee for a year. That is why some collection strategies are built around service methods most likely to produce silence. There is a countervailing rule worth knowing: under C.P.L.R. §3215(c), a plaintiff that fails to pursue a default within one year risks the claim being dismissed as abandoned.

If the deadline is already close, an extension is usually available and is far cheaper than the alternative. Plaintiff’s counsel will often stipulate to additional time, particularly early, because a stipulation costs them nothing and a contested motion to vacate costs them plenty. Get the extension in writing and filed. A verbal courtesy from a collections attorney is not a defense to a default motion, and a business that relies on one and then finds a judgment on the docket has spent its best three weeks buying nothing.

4. Compare the County on the Caption With Your Own Address

Venue is the one structural objection that expires almost immediately, which is why it is on a 72-hour list at all. Under C.P.L.R. §511(a), a demand to change venue on the ground that the county chosen is improper has to be served with the answer or before the answer is served. Miss that and you are left asking a judge for discretionary relief instead of exercising a right. The demand itself names the county you say is proper; the defendant may then move within 15 days after service of the demand, unless the plaintiff serves a written consent within 5 days.

Funders pick counties for reasons that have nothing to do with your business. A merchant in Ohio or Georgia can find itself defending in a Brooklyn courthouse because C.P.L.R. §503(c) ties a corporation’s residence to its principal office and the forum clause in the agreement points there. Whether that sticks in a merchant cash advance case is genuinely unsettled. Trial courts in Kings County have gone both ways, one keeping such a case and another vacating a default and dismissing on foreign-corporation and choice-of-forum grounds, and no appellate decision has resolved the split.

Keep the objection in proportion. Improper venue in New York is not a jurisdictional defect that requires dismissal, so a venue fight rarely ends a case by itself. What it does is change who has the travel burden, which judge sees the file, and how expensive the case becomes for a plaintiff that priced it as a routine collection. In practice that shift is a settlement input rather than a defense, and it is worth exactly as much as the deadline you did not miss.

5. Read the Covenants, Not Only the Reconciliation Paragraph

This is the part of the file that the reported decision actually turned on, and it is the part almost nobody reads. In the 2019 Georgia bankruptcy case, the reconciliation language was present in the document. The court still found it illusory, at 606 B.R. 487, because it could be invoked only once a month and because a separate covenant obliged the merchant to maintain a bank balance of twice the daily payment, which the court measured at 34% of daily collections. It also noted the agreement said nothing about when a reconciled amount took effect, leaving a merchant that paid the lower figure while a request was pending exposed to a breach claim.

The numbers in that case are worth carrying into your own reading, because they show the shape of the transaction the court was looking at: $75,000 advanced against a purchased amount of $111,750, collected at $1,117 a day. Run the same three figures for your own deal. Amount funded, total to be repaid, daily or weekly debit, and then the number of business days it takes to collect the whole thing. Those four numbers, more than any clause, tell you and eventually a judge what the transaction really is.

Then read your covenants section alongside the reconciliation section, on the same page if you have to tape them together. Minimum balance requirements, bars on changing processors, restrictions on additional financing and notice obligations all look survivable in isolation. Stacked, they can make it impossible to comply and to seek relief at the same time, which is the collision the court identified. What a reconciliation right is supposed to do, and how to tell a working one from a decorative one, is set out on our explainer on reconciliation clauses.

6. Save the Bank Record Before the Account Changes

Pull twelve months of business bank statements as PDFs, plus your processor reports and any ACH return notices, and put them somewhere that is not your bank’s online portal. Portals purge, banks close accounts on distressed businesses, and a merchant who waits until discovery to gather statements often finds the earliest months are the ones that cost money to retrieve. While you are in there, build a simple monthly table: total deposits, the percentage the agreement specifies, what that percentage would have entitled the funder to, what was actually taken, and the difference.

That table is the single most useful document a business owner can produce in the first week, and it is useful for a reason that has nothing to do with legal theory. A funder looking at a written schedule showing what it collected above the specified percentage is negotiating against a number. A funder listening to a business owner describe a bad quarter is listening to a story it has heard a thousand times. The same schedule is what a lawyer needs to evaluate whether a reconciliation argument in your file is real or wishful.

One caution about the account itself. Moving your banking, closing the account or revoking the ACH authorization does not extinguish the obligation, and many advance agreements make interference with collection an event of default in its own right, which can accelerate the full balance and hand the plaintiff a cleaner claim than it had. There are situations where changing accounts is the right call and situations where it is the trigger that makes everything worse. That decision belongs with counsel who has read your specific default section, not with a forum post.

7. Send the Two Written Demands That Cost You Nothing

The first letter goes out only if the plaintiff is not the company that funded you. U.C.C. §9-406(c) provides that an assignee demanding payment must seasonably furnish reasonable proof that the assignment was made, and that absent that proof the obligor may discharge its obligation by paying the assignor. That provision was drafted with account debtors on assigned accounts in mind, and how neatly it maps onto a merchant whose advance file was sold is a fair argument rather than a settled rule. The demand still costs a stamp, and a plaintiff that cannot produce a clean chain of assignment has a problem in its own case before it has one in yours.

The second letter is a written reconciliation and accounting request, addressed to the notice address in the agreement, quoting the section number in the first line, sent by certified mail and by email the same day. Ask for the specific documents the funder requires, in what format, covering what period, and by what date. A funder that names its list is bound to its own list. A funder that will not name one while continuing to debit a fixed amount every morning is building your record for you, which is why a documented denial pattern is worth as much six months from now as it is today.

Keep both letters short, factual and free of legal conclusions. You are not arguing the case in correspondence, you are creating dated facts that a lawyer can use in a motion or a negotiation four months from now. Do not make an offer, do not admit an amount, and do not agree to a payment plan on a recorded collection call before counsel has read the file. An informal promise made in week one has a way of turning into the number everyone treats as agreed.

If the First You Heard Was a Frozen Account

Some merchants never see a summons. They discover the case when a bank tells them the account is restrained. Where a confession of judgment is in the file, New York’s C.P.L.R. §3218 imposes limits that are worth checking immediately: the affidavit must state the county where the defendant resided, the judgment may be filed only with the clerk of the county where the affidavit said the defendant resided when it was executed or where the defendant resided at filing, and it may be filed only within three years after the affidavit was executed. The statute also bars entry of a confessed judgment once the defendant has died. Those restrictions are why out-of-state merchants largely stopped being confession targets in New York.

If a default judgment was taken instead, there are two doors and they have different keys. C.P.L.R. §5015(a)(1) requires both a reasonable excuse and a meritorious defense, within one year of service of notice of entry. C.P.L.R. §317 is the route people miss: a defendant served other than by personal delivery who did not personally receive notice in time to defend may move within one year after learning of the entry of the judgment, and no more than five years after entry, and needs a meritorious defense with no reasonable excuse required at all. New York’s Court of Appeals has held that a motion made under §5015(a) may be treated as also made under §317, so the two are not mutually exclusive. Either way, the clock is running from a date that has already passed.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.