Why a Processor May Become Relevant
Because processors handle the flow of receivables, a funder claiming rights over receivables may contact the processor to assert those rights, request information, or seek to redirect funds. The basis for any such contact usually lies in the agreement and applicable law.
Receivables-Related Provisions
MCA agreements may include security interests in receivables, assignments of receivables, or instructions to processors. A UCC filing may perfect the funder’s interest in receivables. The interaction between the contract, the UCC filing, and the processor’s own agreements determines what may happen.
Changing Processors Does Not Eliminate an MCA Obligation
Switching processors is a business decision, but it does not by itself erase an underlying MCA obligation or a properly perfected security interest. This website does not teach processor switching as a way to evade lawful creditor rights.
Processor Notices and Legal Process
A processor may receive a UCC notice, a restraining notice, a garnishment, or a court order. Each is a different instrument with different effects. A processor’s response depends on the instrument and its own obligations.
Processor Obligations Vary
What a processor must do in response to a notice or order depends on the instrument, the processor’s agreements, and applicable law. The specific situation should be reviewed.
When Qualified Counsel May Be Appropriate
If a funder has contacted or is threatening to contact your processor, qualified legal counsel may review the agreement, the UCC filing, and the legal basis for any notice, and advise on responses that protect the business without creating separate exposure.
Key Distinctions
A communication to a processor that may assert rights over receivables.
Notice of a security interest that may cover receivables flowing through the processor.
A judge-issued directive that may require the processor to take specific action.
Key Takeaways
- 01A processor may become relevant because it handles receivables.
- 02A funder’s basis for contacting a processor usually lies in the agreement and applicable law.
- 03Changing processors does not eliminate an MCA obligation or a perfected security interest.
- 04Processor notices may warrant review by qualified counsel.
Not a law firm. MCA Debt Attorney and MYMCAOPTIONS LLC are not law firms and do not provide legal advice. Submitting your situation through this website does not create an attorney-client relationship. Where appropriate, users may be connected with independent legal counsel through a separate engagement.