How a Merchant Cash Advance Attorney Helps Pierce the Corporate Veil in Complex Default Cases

Merchant cash advances (MCAs) are a vital financial tool for businesses that provide capital to other businesses, typically in high-risk, high-reward environments. But when a borrowing business defaults on its agreement, the funder can be left dealing with more than just non-payment. In many cases, defaulting companies attempt to hide behind complex corporate structures to avoid responsibility.

This is where a merchant cash advance attorney becomes critical. For commercial funders, attorneys with deep experience in judgment enforcement and veil-piercing tactics can pursue not just the original business borrower but also affiliated entities or individuals operating in bad faith.

‍

What Does It Mean to Pierce the Corporate Veil in B2B Collections?

In business law, corporations and LLCs are typically protected by limited liability, meaning only the business assets are at risk, not the personal assets of owners or managers. However, when a borrowing business uses its legal structure to commit fraud, shuffle assets, or intentionally avoid its obligations, courts may allow a creditor to “pierce the corporate veil.”

This legal strategy is used to hold affiliated businesses or individual decision-makers liable when:

• A business entity was set up to shield assets from collection.
• There are multiple companies operating under the same control, transferring funds to avoid legal claims.
• The borrowing company was a shell with no real assets, capital, or operations.
• The borrower moved its receivables or operations to a new entity post-default.
  
  

In short, veil-piercing is a legal remedy that allows business funders to pursue what they’re truly owed, even when the original borrower has seemingly disappeared.

‍

Why MCA Defaults Require Specialized B2B Legal Action

MCA transactions are commercial funding arrangements, and defaults can quickly become complex. Borrowers are often closely held businesses that operate multiple entities, shift revenue streams, or dissolve entities to frustrate recovery efforts.

Here’s why working with a merchant cash advance lawyer who focuses on B2B enforcement is essential:

• They understand commercial lending nuances.
• They are skilled in identifying related companies or successor businesses.
• They can litigate quickly and aggressively to freeze transfers and recover assets before they’re gone.
  
  

How a Merchant Cash Advance Attorney Helps Business Clients Uncover Abuse

When a commercial borrower defaults, time is of the essence. A skilled merchant cash advance attorney representing a funding business will deploy a range of legal tools to investigate and enforce:

1. Business Entity Discovery

Attorneys can investigate other related business entities using

• Subpoenas for financial and banking records
• Secretary of State filings for associated companies
• Public records and UCC filings

2. Fraudulent Transfer & Alter Ego Claims

If a defaulting business transferred assets to a related company or operated in a way that ignored the corporate formalities, your attorney may pursue:

• Fraudulent conveyance claims
• Alter ego liability
• Successor liability actions

These are commercial enforcement strategies that allow funders to seek recovery from affiliated businesses, not individuals acting as consumers.

3. Court-Enforced Recovery

A merchant cash advance attorney can take your B2B claim to court and:

• Add additional business defendants
• File injunctions to freeze accounts or prevent asset sales
• Obtain post-judgment remedies, including levies or garnishments on business accounts
  
  

Why MCA Funders Need Judgment Enforcement Attorneys

Winning a judgment is only part of the equation. Enforcing it—especially against evasive or shell business borrowers—requires aggressive legal action.

A judgment enforcement attorney with experience in merchant cash advance cases can:

• Use post-judgment discovery to uncover hidden assets.
• Trace intercompany transfers between affiliated businesses.
• File court motions to freeze accounts or hold companies in contempt.
  
  

And most importantly, they act on behalf of business clients who are navigating legal disputes with other businesses, not individual debtors.

‍

Turn Legal Complexity Into Business Recovery

In the world of B2B finance, merchant cash advance defaults can be sophisticated and strategic. Shell companies, asset transfers, and corporate maneuvering are all common tactics used to delay or block repayment. But funders don’t have to accept these losses.

With the help of a New York merchant cash advance attorney focused on commercial litigation and enforcement, your business can pierce the corporate veil, pursue successor businesses, and hold bad actors accountable.

David I. Mizrahi Law P.C. is proud to represent businesses, providing legal strategies that cut through complex corporate structures to enforce your rights. If you're facing a challenging default case, contact us today to discuss how we can help your business recover what it's owed.

‍

FAQs for Business Clients

Can I hold another business liable if my borrower defaults?

Yes, if the other business is shown to be a successor entity, alter ego, or part of a fraudulent transfer. A skilled attorney can evaluate your case and pursue other liable parties.

Is veil-piercing a quick process?

No, it requires building a strong factual and legal case. However, the sooner you engage a judgment enforcement attorney, the better your chances of recovering assets before they’re moved.

How is this different from working with a collections agency?

Collection agencies have no legal authority to pierce corporate veils or file court actions. Only licensed attorneys can pursue advanced legal remedies like injunctions, subpoenas, or entity-targeted lawsuits.

What industries do you typically work with?

We work with merchant cash advance funders, commercial finance providers, corporate creditors, and businesses that need to enforce judgments against other businesses or commercial entities.