Denali Construction Services, LLC v. Cloudfund, LLC; True Business Funding LLC; InstaFunding d/b/a TVT SVPL; Infusion Capital Group, LLC; Skyline Business Capital, LLC; Top Tier Capital, LLC; Parkside Funding Group, LLC; and Elite Funding, LLC

Summary

The United States Bankruptcy Court for the Northern District of Texas issued findings of fact and conclusions of law after a trial in an adversary proceeding arising from Denali Construction Services, LLC's Chapter 11 case. The court determined that Infusion Capital Group's purported merchant cash advance agreements were loans under Texas law, rather than true purchases of future receivables, and addressed insolvency, fraudulent-transfer issues, and related claims involving InstaFunding. The document also addresses the parties, financial distress, transaction terms, and procedural history.

Holdings

1. The Infusion Agreements constituted loans under Texas law, not true account purchase transactions, because Infusion advanced money subject to Denali's absolute obligation to repay fixed, predetermined amounts plus additional compensation, without assuming meaningful risk tied to Denali's actual receipts.
2. The Infusion Agreements were usurious because they were loans, Denali had an absolute obligation to repay the principal, and Infusion contracted for and charged compensation substantially exceeding the maximum lawful interest rate for commercial loans under Texas law.
3. Denali was entitled to treble statutory damages of $2,658,228.96, declaratory relief that the Infusion Agreements were usurious loans, and reasonable attorney's fees and costs of $65,777.28 against Infusion.
4. The third-party guarantors had no further liability under the guaranties, and judgment was awarded in their favor on all third-party claims.
5. The Infusion Agreements were avoided as constructively fraudulent obligations, and the lien granted to Infusion was avoided as a constructively fraudulent transfer under 11 U.S.C. § 548(a)(1)(B).

Questions Presented

1. Whether the Infusion Agreements were true purchases of future receivables or loans under Texas law.
2. Whether the Infusion Agreements charged interest in excess of the maximum rate permitted for commercial loans and therefore violated Texas usury law.
3. Whether Denali was entitled to statutory treble damages, declaratory relief, and attorney's fees for the usury violations.
4. Whether the Infusion Agreements and the related lien constituted constructively fraudulent obligations or transfers avoidable under 11 U.S.C. § 548(a)(1)(B).
5. Whether the third-party guarantors were liable under the guaranties associated with the usurious agreements.

Disposition

other