8 Things to Know About Prejudgment Remedies in MCA Lawsuits

This is where most business owners get confused. A prejudgment remedy is not the court saying you owe the money. It's the court saying the lender has enough of a case that your assets should be frozen while the lawsuit plays out. You haven't lost yet. But your money is already gone.

Think of it this way — the lender walks into court, shows the judge your MCA agreement, shows the confession of judgment you signed, shows evidence that you stopped paying, and says "this person is going to move their money before we can collect." The judge agrees, signs an order, and now your bank account is frozen. That can happen before you even know you've been sued.

You've probably heard that confessions of judgment (COJs) were banned in New York in 2019 for out-of-state borrowers. That's true. But here's what people get wrong: COJs are not fully dead. If you're a New York-based business that signed a COJ with a New York lender, it can still be enforced. And even where COJs are banned, lenders have shifted to other prejudgment tools that accomplish the same thing, just through a different door.

The lender doesn't need a confession of judgment to freeze your accounts anymore. They have restraining notices, attachment orders, and temporary restraining orders. The COJ ban closed one path. It didn't close the highway.

This is the one that hits business owners the hardest. A restraining notice (under New York CPLR 5222) is a document the lender serves directly on your bank. Not on you. On your bank. The bank is legally required to freeze the funds the moment they receive it. No hearing required. No advance notice to you.

You find out when your debit card gets declined, or when payroll bounces, or when a vendor calls asking why their payment was reversed. By then the money is already locked. And it's not just your business account — if you personally guaranteed the MCA (which you almost certainly did), they can freeze your personal accounts too.

The lender can issue this the same day they file the lawsuit. Some lenders have this process down to a science. They file in the morning, serve the restraining notice by afternoon, and your accounts are frozen by end of business. 24 hours. That's all it takes.

When people hear "temporary restraining order" they think it lasts a few days. In MCA litigation, a TRO can last weeks or months depending on how fast the court moves. And during that entire time, your assets are frozen. You can't pay employees. You can't pay rent. You can't pay your other creditors. You can barely operate.

The lender knows this. The TRO isn't just a legal tool — it's a pressure tool. They freeze everything, watch your business suffocate, and wait for you to settle on their terms. That's the play. And it works, because most business owners can't survive 30 to 60 days with no access to cash.

An attachment order is different from a restraining notice. A restraining notice freezes what's in your bank. An attachment order lets the lender go after specific property — equipment, inventory, vehicles, receivables, whatever has value. The court issues the order, a sheriff or marshal executes it, and now your assets are physically or legally seized.

In MCA cases, the most common attachment targets are:

Bank accounts (overlap with restraining notices, but attachments have stronger legal footing)

Accounts receivable — money your customers owe you gets redirected to the lender

Equipment and inventory — especially in industries like trucking, construction, restaurants where hard assets are visible and valuable

Real property — if you put up any real estate as additional collateral, or if the lender can argue your personal guarantee covers it

The lender doesn't need to prove you'll lose the case. They need to prove there's a probability they'll win and a risk that assets might be moved or wasted before judgment. That's it. And with a signed MCA agreement in hand, most judges grant these without much pushback.

Read your MCA agreement. Actually read it. There's almost certainly a clause in there where you waived your right to contest prejudgment remedies. You agreed — in writing, at the time you took the advance — that the lender could seek these remedies without prior notice to you, and that you would not oppose them.

Most business owners don't remember signing this. They don't even remember reading it. But it's there. And lenders cite it in every motion they file.

Now — can you still fight it? Yes. Waiver clauses aren't always bulletproof. Courts have pushed back on overly broad waivers, especially when the lender's conduct was predatory or the terms were unconscionable. But you need an attorney who understands MCA litigation specifically (not just any commercial litigator), and you need to move fast. As in days, not weeks.

This isn't random. MCA lenders structure their agreements so that disputes are filed in jurisdictions that are favorable to creditors. New York is the most common. Your business could be in Florida, Texas, California — doesn't matter. If your MCA agreement has a New York forum selection clause (and it probably does), the lawsuit gets filed in New York.

Why does this matter for prejudgment remedies? Because New York's rules (CPLR Article 62, CPLR 5222) are extremely lender-friendly when it comes to pre-judgment asset freezes. The lender files in a court system that already has streamlined procedures for this exact scenario. The judges have seen thousands of MCA cases. The paperwork is boilerplate. The orders get signed fast.

You're fighting on their turf. And that's by design.

Here's what most people don't realize: you can challenge prejudgment remedies. You can move to vacate a restraining notice. You can oppose an attachment order. You can argue the TRO was improperly granted. But the window to do this is measured in days, not months.

The most effective defenses include:

Arguing the MCA is actually a loan — if the agreement is recharacterized as a loan (which happens more often than lenders want you to think), then the lender may not be entitled to the same remedies. Usury defenses open up. Consumer protection arguments open up. The entire framework shifts.

Challenging the waiver clause — unconscionability, lack of meaningful choice, predatory terms. These arguments work better than they used to, especially after the 2019 reforms.

Showing the lender's misconduct — if the lender engaged in fraud, misrepresentation, or violated the terms of the agreement themselves, that undermines their right to equitable relief.

Demonstrating no risk of dissipation — the lender has to show your assets are at risk. If you can prove you're operating in good faith and not hiding money, the court may lift or modify the freeze.

Filing an order to show cause — this forces a hearing where you can present your side. Speed matters. If you wait too long, the court treats the freeze as settled.

The single biggest mistake business owners make is doing nothing for the first week. They're in shock. They can't believe their accounts are frozen. They think it's a mistake. They call their bank. They call the lender. They waste days. And every day you waste is a day the lender's position gets stronger.

If you even suspect a prejudgment remedy is coming — if you've defaulted on an MCA, if you've received a demand letter, if your daily ACH got returned and you know the lender noticed — you should be talking to an attorney who handles MCA defense today. Not tomorrow. Not after you "figure out what's going on." Today.

The system is built to move fast against you. You need to move faster.