MCA Resolution Offer Letter
Template and 8 Terms to Address

The amount offered is the least instructive term in the letter.

A business that wins a discount while leaving the definition of what the payment resolves has purchased a receipt, not a resolution, and the file will reopen around the question the parties lacked the patience to reduce to language.

The eight terms below are drafting priorities rather than commands of any statute. Counsel should conform them to the posture of the dispute, the identity of the claimant, and the paper already in the file.

Parties, Guarantors, and Authority

Months after the advance funded, the owner may no longer know who owns the paper.

Servicing rights trade while ownership remains opaque, and the name on the collection notice is not always the name that can deliver a release. The first term is therefore the identity of the parties and the agreements the proposal covers, stated with legal names, dates, and account references that permit the recipient to identify each transaction without inference.

Most buyers of distressed MCA paper studied the schedules before they bid. They prefer the file unexamined.

Authority precedes arithmetic.

The second term is the treatment of any individual guarantor. Proof of authority behind the person across the table belongs beside it, and counsel should ask who may accept the proposal and bind the claimant to the release before any figure is discussed (the sample behind that impression is small and unscientific, though the pattern recurs). A letter that resolves the company balance may say nothing about the person who guaranteed performance, and silence on that point reads as exclusion when the next demand arrives.

Amount, Schedule, and Payment Mechanics

Money gives the letter its urgency and most of its danger.

The third term states the total proposed payment, the dates on which each portion falls due, and the source of the funds where availability depends on an event that has not yet occurred. Discount talk fills the room the way steam fills a kitchen: visible, warm, and gone when the window opens. A peculiar optimism follows when the funder accepts the number before reading the terms. A schedule deserves a cash forecast built from expected receipts and the expenses required to keep the doors open.

You name a figure and then you learn what the figure has to carry.

And the total conceals as much as it states, because the fourth term governs payment mechanics: written instructions from an authorized recipient, verification through a channel the business already trusts, and a statement of how each transfer will be credited and confirmed. The owner should ensure every instruction is confirmed before funds move. Simply state the proposed amount, the schedule, and the agreements covered, and leave the operative language for counsel to refine. I have yet to see a portal balance that matched the final payoff figure, though portals continue to present themselves as answers.

Release Scope, Timing, and Mutuality

New York statute that validates written releases provides that a written release does not fail for want of consideration or a seal. The statute supplies form. Scope, parties, and exclusions remain for the fifth term to name among the claims and obligations the payment is intended to conclude.

The release is, if we are being precise, the purchase the payment makes. Often we see drafts that describe the payment in detail and the release in generalities, as though the money were the agreement and the words its wrapping. Counsel should review and analyze the operative language alongside any reservation of rights, since a clause that appears to conclude everything may preserve the very claim the owner most needs concluded.

The sixth term fixes the release trigger and the mutuality of the exchange. The release ends the dispute. The reservations revive it. The governing language in the document is the trigger rather than the caption. Does the release operate upon execution, upon receipt of funds, or upon completion of an installment schedule, and what posture governs the interim while installments remain outstanding. Ask whether the release runs in both directions and what the business surrenders through its own concessions. Whether courts outside New York would read identical release language the same way is a question this article cannot answer from the sources at hand. We review the terms, identify the deficiencies, and construct a response that addresses both the contractual claims and the practical realities of cash flow.

Litigation and Financing Statement Action

A pending case requires an agreed disposition, a responsible preparer, and a date by which the filing will be complete.

New York rules on voluntary discontinuance supply a default of discontinuance without prejudice unless the filed document states otherwise, so counsel should ensure the intended result appears in the paper the court receives. The debit authorization (which collectors will describe as routine servicing) survives until the agreement says otherwise, since it was drafted in order to survive this precise moment. Resist the urge to stop the debits the day the letter goes out.

Any financing statement requires a separate written instruction that identifies the filing and states who will perform the required termination action and when. New York termination provisions for financing statements impose duties only where specified conditions are met, and a proposed payment does not by itself establish that those conditions have occurred. The statute is not entirely clear on partial performance, which is part of the problem. If a judgment exists, counsel should address its satisfaction in the definitive document.

Acceptance, Tax, and Records

Most owners authorize the first offer before counsel has seen the file, and I understand why.

The eighth term defines acceptance, tax awareness, and records: where the recipient should respond, whether the business requests a draft agreement for review, and the acknowledgment that canceled debt can produce income consequences under the IRS guidance on canceled debt, with exceptions that depend on facts no letter can assume. Any communication with the lending party, even casually, can alter the posture of the file. Anything the owner volunteers, or withholds, in the cover email may later be used against the guarantor. An extremely small trigger with extremely large consequences waits in the acceptance paragraph. The owner should ensure the executed agreement, payment confirmations, and completion documents remain together in one place, since a receipt without a release closes nothing.

Delancey Street offers a confidential initial review of MCA resolution possibilities through its commercial settlement service. The company is a settlement company and not a law firm, and legal work belongs with independently licensed counsel. Every commercial dispute ends the same way, with paper that either forecloses the next dispute or invites it.