No Published Average Prices an MCA Resolution
The Account Level Calculation

No published average can price the resolution of a merchant advance. A bare percentage hides the denominator, the collection of cases behind it and the distance between those cases and the obligation the business is trying to resolve.

An owner needs an estimate founded on the account, the creditor position and the funds available to pay. The useful question concerns a supportable outcome for this debt rather than a number presented as the normal result.

That calculation begins with what the percentage measures, continues through the facts of the account and ends with the net amount the business keeps after every cost is counted.

The Denominator Problem

Rarely does a creditor volunteer the denominator. A settlement statistic might compare the payment with enrolled debt, the amount claimed when negotiation began or an earlier balance swollen by fees. Those denominators produce different impressions where the money paid is identical. An average is a photograph of a crowd in which no face can be recognized.

The collection behind the number matters as much as the arithmetic. Ask whether the figure includes fees and unsuccessful accounts, and ask what the count includes, or excludes. Completion of a program, acceptance by one creditor and final resolution of every obligation are different outcomes, and a statistic that blends them describes none of them.

Simply request the definition and the source before using the number in a business forecast. Precision unsupported by the record does not make the advice more valuable, and a range with conditions serves better than a point without any. I have yet to see an owner regret asking for the denominator.

Three files on one desk this spring produced three different resolutions (a small sample, though the pattern recurs). The statistic was accurate. It was also useless.

The Account Facts That Move the Figure

The rights attached to the claim set the opening position. A secured claim with a signed guarantee should not be compared with an unsecured balance owed by an entity without available assets. The payment history around reconciliation can shift the posture further.

In LG Funding v United Senior Properties, New York appellate judges considered reconciliation, term and bankruptcy recourse in assessing whether repayment was absolute. Those features inform the legal analysis of an account. They establish no standard discount for the industry. Whether this holds outside New York is a question no desk review can answer.

Counsel should review and analyze the actual documents before the owner assumes a defense will control the outcome. The attorney should ensure any asserted position is supported, and should ensure negotiation does not displace procedural requirements. Opposing counsel in these matters tends to open with the full claimed balance.

Available funds matter as much as legal position. An immediate supported payment and an uncertain installment promise present different proposals at the same nominal amount. The creditor accepted this one for reasons the next creditor may not share. The creditor quotes the full balance in order to anchor the negotiation.

The procedural posture belongs in the assessment as well. An account in ordinary communication and one already in litigation require different professional work at different cost. Give the reviewer the actual agreements and the actual notices, since anything the owner writes about the account can be used against the business once litigation begins.

And the estimate should state whether it assumes immediate payment or installments. An amount available today supports a different proposal from the same amount spread across months in which the creditor continues to bear collection risk.

The Net Calculation After Agreement

The final result is measured from the agreement performed rather than from the first estimate supplied. Include creditor payments, service charges and separate professional expenses in the total before calling any part of it savings, though the final tax result may remain open at signing.

The IRS guidance on canceled debt explains that canceled debt can create taxable income, subject to exceptions and exclusions. The relevant taxpayer and circumstances require assessment before the nominal reduction is treated as money retained. The net amount is extremely sensitive to timing: a payment moved by a month can change the funds available to make it.

Cash timing stays visible after the total is calculated. An arrangement may demand substantial funds before the revenue expected to support it arrives, and any borrowing or owner contribution used to close the gap forms part of the broader decision.

Retain and file the executed terms, the payment confirmations and the creditor acknowledgment. A projected percentage should not remain the figure in the accounts after the transaction closes.

Delancey Street and the Supported Estimate

Delancey Street offers a free confidential initial review focused on merchant advance distress, and coordinates legal matters with independently licensed counsel. The company is a debt settlement company rather than a source of guaranteed savings percentages.

Confirm eligible accounts, fees and the scope of assistance. Ask what facts support any preliminary estimate and what could change it. The business approves the actual terms before acceptance.

A Figure the Business Can Perform

Prepare a forecast that lists necessary expenses, existing obligations and the source of every dollar offered, with estimates marked as estimates. A future customer payment should not be presented as available cash.

Resist the urge to make the forecast match a percentage heard in an advertisement. The enterprise needs a commitment it can perform rather than a figure chosen to resemble another borrower result. An extremely favorable reduction can be unaffordable if the deadline requires expensive new financing.

Whether the certainty of a documented close is worth more than a larger nominal reduction is a question worth carrying into the forecast.

Some benefits resist translation into a percentage: predictable payments, an end to daily debits, a dispute with a documented close. The review should identify the obligations, price the alternatives, and produce a payment the owner can support. The useful settlement amount emerges from the account facts and the business capacity, leaving a payment the owner can support rather than an average borrowed from cases whose denominators remain unknown.