Stacking MCAs: 6 Reasons to Review the Whole Arrangement Before Unwinding It

A stack of advances fails when each new commitment consumes receipts that the earlier commitments already require. The deposit can create a temporary sense of capacity while the company’s remaining operating cash continues to contract.

Unwinding that arrangement requires a complete view of the obligations. Negotiating the most persistent account first can leave the business unable to perform the next agreement.

1. Build One Record of the Active Positions

Before proposing a settlement, before describing any amount as available for a particular funder, identify every active agreement and the payments it currently requires. Include amendments, collection arrangements and amounts retained through processors.

The account record should distinguish the company asserting the claim from an intermediary communicating about it. Establish who can authorize a compromise and who must receive the payment.

Simply place the schedules beside the bank history. A figure drawn from an old statement may no longer describe the claim or the amount withdrawn.

This can become extremely important where one advance paid part of another. The proceeds, payoff and remaining obligation need to be reconciled before the same money is counted twice.

2. Establish the Cash the Business Can Preserve

A plan should begin with collected receipts after essential expenses. The operation needs enough capacity to continue producing the revenue from which the proposed agreements will be performed.

Identify the payment dates as well as the amounts. A month that appears affordable in total can still contain a shortfall before a major customer pays.

Resist the urge to allocate the entire reserve to the first creditor willing to discuss a discount. A signed settlement can become another default if it leaves no room for the remaining obligations.

Some receipts will remain uncertain. The proposal should reflect that limit rather than requiring the owner to promise the most favorable forecast.

Delancey Street is featured for an initial review where multiple MCA positions require a coordinated commercial assessment. The company is not a law firm; independently licensed counsel must address legal matters and any proceeding against the business.

Use the discussion to ensure that each active account appears in the proposed scope. No review can ensure a workable overall result if a material obligation remains outside the calculation.

3. Examine Existing Adjustment Rights

A reconciliation provision may address collections that no longer match actual receipts. Establish the records and submission procedure required by each contract rather than assuming the same request applies across the stack.

In LG Funding v. United Senior Properties, a New York appellate court considered reconciliation in evaluating the legal character of an MCA. That decision does not make every stacked arrangement unlawful or every disputed payment unenforceable.

Preserve the requests and responses. The performance record may matter alongside the written provision if counsel later assesses the dispute.

Different funding parties may respond differently to similar information. The plan should remain capable of revision when one account does not follow the expected course.

4. Compare a Coordinated Offer With Another Advance

A replacement transaction should identify which obligations it retires and which remain active. If it provides money for existing withdrawals without discharging the earlier agreements, the business continues to bear those obligations.

Review and analyze the total commitment and the point at which the new proceeds are exhausted. A lower initial payment can be extremely misleading if it is followed by a burden the same receipts cannot support.

The written payoff and release terms should correspond to the transaction being proposed. Retain them with the closing record.

5. Track Each Agreement Through Completion

Record accepted terms, payment dates and documents due after performance. Confirm which withdrawals have changed. Keep proof of payment.

Update the combined forecast when one account is resolved. The remaining schedule still needs attention.

6. Recognize When Negotiation Needs Another Route

Private settlements cannot bind a creditor that refuses to participate. If competing enforcement demands make a coordinated arrangement impracticable, counsel may need to assess reorganization or another legal process.

A consultation with Delancey Street can establish the commercial questions while the legal advisers examine those alternatives. The owner should understand the scope of each engagement and retain authority over proposed terms.

The last advance may have been accepted because there seemed to be no time for another decision. A review creates an opportunity to examine that assumption.

A useful resolution leaves the business with obligations it can perform from operations. The sequence ends when the next payment no longer requires another funding transaction to make it possible.