Category Archives: Federal Court

US District Court Holds Individual Guarantors Liable for Business Loan; Rejects Usury Challenge

An alternative small business lender provided a loan to a business located in Texas. The loan was guaranteed by two individuals.  The agreement contained a choice of law provision which provided that the transaction would be interpreted and governed by … Continue reading

Posted in Choice-of-Law, Civil Usury, Federal Court, Texas | Comments Off on US District Court Holds Individual Guarantors Liable for Business Loan; Rejects Usury Challenge

Increased Value of Pledged Stock Not Interest

A lender provided a $600,000 loan to a borrower on the condition that the proceeds be used to purchase shares of a publicly traded company. The note provided for an interest rate of 10% and granted the lender warrants to … Continue reading

Posted in Criminal Usury, Federal Court, New York, Recharacterization, Statute of Limitations | Comments Off on Increased Value of Pledged Stock Not Interest

U.S. District Court Holds that Purchase of Future Settlement Proceeds Violates Kansas Usury Law

A litigation finance firm advanced funds to an individual that was pursuing a personal injury case against a gas can manufacturer. After receiving a series of cash advances, the individual filed suit against the financing firm in U.S. District Court alleging that the … Continue reading

Posted in Civil Usury, Federal Court, Kansas, Sale vs. Loan, Usury Cap, Usury Exceptions | Comments Off on U.S. District Court Holds that Purchase of Future Settlement Proceeds Violates Kansas Usury Law

Citing Madden v. Midland Funding, Colorado Regulator Challenges Bank Partnership Model

The Colorado Administrator of the Uniform Consumer Credit Code (UCCC”) has filed complaints against two UCCC licensees alleging violations of Colorado’s usury cap. Both licensees utilize bank partnerships to originate their loans. Citing Madden v. Midland Funding, the Administrator, represented … Continue reading

Posted in Assignor-Assignee, Attorney General, Colorado, Federal Court, National Bank Act, Preemption, Usury Cap, Usury Exceptions | Comments Off on Citing Madden v. Midland Funding, Colorado Regulator Challenges Bank Partnership Model

Convertible Note with 150% Default Penalty Not Usurious

A creditor purchased four convertible promissory notes from a company. The notes provided that they could be converted to unrestricted common stock of the company at a 45% discount. Upon an event of default, the notes carried a penalty that required a payment from the … Continue reading

Posted in Criminal Usury, Federal Court, Interest Calculation, New York | Comments Off on Convertible Note with 150% Default Penalty Not Usurious

Excessive Interest Caused By Contingency Under Debtor’s Control Not Usurious

A horse owner provided a loan to a horse trainer. The promissory note required simple interest payments of 4% per annum. The trainer had the option of providing free training for two of the owner’s horses in lieu of paying … Continue reading

Posted in California, Civil Usury, Federal Court, Usury Exceptions | Comments Off on Excessive Interest Caused By Contingency Under Debtor’s Control Not Usurious

Bankruptcy Trustee Seeks to Recharacterize Litigation Financing Contract as Loan, Survives Motion to Dismiss

A litigation finance firm advanced funds to an attorney working a personal injury case on contingency. The attorney ultimately settled the case and was awarded a portion of the settlement as his fee. Following the settlement award, the attorney’s creditors, including the … Continue reading

Posted in Bankruptcy, Civil Usury, Federal Court, Recharacterization | Comments Off on Bankruptcy Trustee Seeks to Recharacterize Litigation Financing Contract as Loan, Survives Motion to Dismiss

Supreme Court Denies Madden v. Midland Funding Cert. Petition

The Supreme Court has denied Midland Funding’s petition for certiorari. As a result, the 2nd Circuit’s holding that nonbank assignees are not entitled to NBA preemption if they are not acting on behalf of a national bank will remain binding law on the … Continue reading

Posted in Choice-of-Law, Federal Court, National Bank Act | Comments Off on Supreme Court Denies Madden v. Midland Funding Cert. Petition

Plaintiff Awarded Treble Damages for Usurious Interest Charges

A mother pawned some jewelry and coins in exchange for a loan which carried an interest rate of twenty percent per month. After the mother died, her son attempted to regain possession of the pawned items. The pawnbroker refused to … Continue reading

Posted in Connecticut, Federal Court, RICO | Comments Off on Plaintiff Awarded Treble Damages for Usurious Interest Charges

US District Court Decision Casts Doubt on Applicability of NBA Preemption to Bank Partners

The recent decision in Edwards v. Macy’s Inc. from a US District Court in New York seemed to provide reassurance that NBA preemption extends to non-bank agents acting on behalf of a national bank. In the Edwards decision, the court relied on Madden v. Midland Funding for … Continue reading

Posted in Federal Court, National Bank Act, Pennsylvania, Preemption | Comments Off on US District Court Decision Casts Doubt on Applicability of NBA Preemption to Bank Partners