Specialty Agricultural Refrigeration & Distribution Company

MCA lender negotiation

Case: A Business Shutdown Amid $8.3 Million in MCA Debt

MCA Stacking Solutions (MCASS) was engaged by a specialty agricultural refrigeration warehousing and distribution company in California facing an unusually difficult situation. At the time of engagement, the business owed approximately $8.3 million across six merchant cash advance (MCA) funders. Its contracts called for combined weekly payments of $370,000, creating a substantial repayment burden.

The company then lost its warehouse lease, forcing operations to shut down. Its refrigeration systems and related equipment had been custom-built for the facility. Moving the operation to another location was not a practical option. The owner had personally guaranteed the MCA obligations and wanted to make every effort to repay the debt personally rather than pursue bankruptcy. The plan was to sell the specialized equipment, use the proceeds to address the MCA balances, and gain enough time to do so without continuing the original weekly payment burden.

MCASS Strategy

MCASS developed a two-stage approach focused on extending the repayment timeline and reducing the total amount ultimately owed. The first stage was to create room for the owner to work toward selling the equipment while making payments at a level far below the original contractual requirements.

For approximately 11 months, the owner made average weekly payments of $75,000 to the MCA funders, compared with the original combined contractual requirement of $370,000 per week. Over this period, the outstanding MCA balance fell from $8.3 million to approximately $5.0 million. This helped extend the available time for the equipment sale and the next stage of negotiations.

Resolution: Global Settlement

After reducing the outstanding balance to approximately $5.0 million, MCASS successfully negotiated a global settlement with all six MCA funders. The agreement included:

  • Total Settlement Amount: All six MCA funders agreed to accept a combined payoff of $2.991 million.
  • Extended Repayment Term: The discounted settlement amount was structured over a 24-month repayment period.
  • Reduced Debt Obligation: The negotiated settlement reduced the remaining $5.0 million balance by approximately $2.009 million.
  • Extended Timeline: The agreement allowed the owner to address the discounted debt over a longer period instead of facing the original demanding payment schedule.

Conclusion

Through its structured negotiation strategy, MCASS helped the company and its owner save approximately $2.0 million in MCA debt. By combining 11 months of reduced payments with a 24-month global settlement, MCASS extended the overall repayment timeline to nearly 36 months. This case demonstrates how coordinated negotiations with multiple MCA funders can create a more manageable path toward resolving significant debt obligations, even when business operations have come to a complete stop.