Early methods[ edit ] Merchants have sought methods to minimize risks since early times. Methods for transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. The Babylonians developed a system which was recorded in the famous Code of Hammurabic.
When is a loan not a loan? When it is a merchant cash advance which purchases future receivables and does not contain a promise to pay. But a loan is a loan, and this lender actually structured the transaction documents so that there was no obligation to repay the indebtedness.
I guess it checked all the boxes to exempt it from New York usury but, then again, when a judgment is issued against the guarantors, I fail to see the distinction between a purchase and a loan. The principals executed personal guaranties of performance. There was no maturity date. The amount owed did not increase with time.
There were no scheduled payments nor a fixed repayment term. The guarantee is no broader than the obligations under the MCA agreement and the guarantor's payment requirements are no greater than that of the merchant. The money advanced by plaintiff is not repayable in the absolute.
Defendants' payments under the MCA agreement were contingent on the performance of their own business.
Plaintiff assumed the risk that there would be no receivables and therefore no payment. The defendant filed an answer claiming the transaction was a loan and usurious.
The plaintiff filed a motion to strike those affirmative defenses and to enter judgment. The court granted the motion ruling that the MCA was not a loan. Creditor wins, debtor loses.
But wait—the judgment was an absolute order to repay the sum and was likewise entered against the guarantors. MCA proponents argue that the guarantors were only guarantying performance of the purchase.
If that is the case, what is the difference between a guaranty of the obligation and a guaranty of performance? What are the takeaways here? The decision does not enlighten us whether the judgment is a personal obligation of the debtor and its guarantors but it sounds like it. That said, New York is more lenient on these types of transactions than California.
The bottom line to this case is that the creditor did a great job of arguing that this transaction was only a purchase of receivables.The MWUA provides a method whereby an adequate market for windstorm and hail insurance may be provided in the Coastal Area of Mississippi.
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Information concerning minimum requirements for grading. Items considered for Grading in Protection Class 1 to Protection Class 8. Information and frequently asked questions concerning Municipal and Legal Fire District surveys.
Case opinion for MS Supreme Court MISSISSIPPI WINDSTORM UNDERWRITING ASSOCIATION v. Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.. An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter.A person or entity who buys insurance is known as an insured or as a policyholder.
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