Ch. 7 Ruling Is Warning For Merchant Cash Advance Providers

Ch. 7 Ruling Is Warning For Merchant Cash Advance Providers

Court ruling recharacterizes MCA agreements as loans, exposing funders to multi-million-dollar preference liability.

July 18, 2025

United States
United States
United States
Law360

A recent bankruptcy court ruling in In re: JPR Mechanical Inc. delivers a major warning to MCA providers: labels won’t protect you if your agreement looks like a loan. The court ordered a provider to return over $3 million in payments after recharacterizing its contracts as disguised debt. This decision underscores the growing risk of preference exposure, especially when reconciliation terms are weak or procedural missteps occur. With courts increasingly focused on economic substance over form, MCA funders should take note.

Read the full analysis to see what this means for your contracts, litigation strategy, and compliance risk.

The materials on the Eversheds Sutherland website are for general information purposes only and do not constitute legal advice. While reasonable care is taken to ensure accuracy, the materials may not reflect the most current legal developments. Eversheds Sutherland disclaims liability for actions taken based on the materials. Always consult a qualified lawyer for specific legal matters. To view the full disclaimer, see our Terms and Conditions or Disclaimer section in the footer. Eversheds Sutherland is a provider of legal and other services operating through various separate and distinct legal entities. For further information about these entities and Eversheds Sutherlands' structure please see the Legal Notice page of this website.

Services

Industries

Key contacts

davidwender@eversheds-sutherland.com

David A. Wender

Partner

Atlanta, United States | Houston, United States

brennanposner@eversheds-sutherland.com

Brennan A. Posner

Partner

Atlanta, United States

nathanieldeloatch@eversheds-sutherland.com

Nathan T. DeLoatch

Associate

Atlanta, United States

Latest Insights

  • legal updates
  • legal updates
  • legal updates
  • legal updates

Latest News

  • client news
  • firm news
  • client news
  • client news

Latest Events

skyscrapers upward view symmetry modern corporate architecture city

legal updates

September 24, 2026

atrium interior architecture curved levels modern office building design

legal updates

September 23, 2026

40701102_XXL

legal updates

September 17, 2026

Modern office building glass facade exterior

legal updates

September 16, 2026

© Eversheds Sutherland 2026. All rights reserved. Eversheds Sutherland is a provider of legal and other services operating through various separate and distinct legal entities. For further information about these entities and Eversheds Sutherlands' structure please see the Legal Notice page of this website.

Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed or affiliated firms and the members of Eversheds Sutherland (Europe) Limited and Eversheds Sutherland (Africa) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global entity. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client. For further information about these Eversheds Sutherland Entities and Eversheds Sutherlands’ structure please see the Legal Notices page of this website. For information on Konexo please also see the Legal Notices page of this website.