Case Study

Construction Firm Overcomes UCC Freezes & $25K/Day Withdrawals

A mid-sized construction company working on school district contracts found itself trapped under three stacked MCAs withdrawing over $25,195 per day, threatening payroll, vendor payments, and ongoing projects. Two funders issued summonses and a UCC lien froze receivables, leaving the business on the brink of collapse.

Before (Crisis State)

  • 3 stacked MCAs
  • $25,195/day in withdrawals
  • Over $111,000/month drained
  • UCC lien froze incoming payments
  • 2 summonses filed
  • Payroll at risk
  • Unable to pay vendors or rent
  • High revenue but extremely low net margins
  • Owner overwhelmed and out of options

After (Stabilized & Protected)

  • 43% reduction in total payment obligations
  • 7% reduction in total balance
  • All UCC liens released
  • All lawsuits stayed
  • Cash flow normalized
  • Payroll secured
  • Vendor payments restored
  • Company remained operational
  • Clear path to recovery using realistic, data-backed modeling
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Client Background

A construction firm specializing in school district projects entered a severe cash-flow crisis after taking on three Merchant Cash Advances to cover payroll and materials. Despite strong top-line revenue, profit margins were tight due to labor-heavy contracts. Withdrawals exceeded $25,195 per week, totaling more than $111,000 per month. Two funders issued summonses, a UCC lien froze receivables, and the business was days away from missing payroll.

The Crisis

Weekly MCA withdrawals reached $159,000, totaling roughly $700,000 per month. Three UCC liens were filed by funders, causing processors to freeze incoming revenue. At the same time, several funders initiated litigation, and more were preparing to follow. The CFO was under immense pressure. A previous engagement with a debt settlement company had worsened the situation, leaving the hospital vulnerable and partially unprotected. Essential operations—payroll, vendors, rent, equipment procurement—were all at risk of imminent failure.

Understanding the Financial Reality

Douglass Advisory reconstructed the company’s financial picture using cash-flow modeling, margin analysis, and forecasting. We identified these issues:

Unsustainable Cash-Flow Cycles

The company’s payment schedule was out of sync with actual cash-flow timing, creating constant volatility and making daily operations financially impossible.

Thin Margins Masked by High Revenue

Despite strong top-line revenue, margin analysis revealed that profits were too slim to support the MCA withdrawals — a critical misunderstanding that distorted lender expectations.

Misinterpretation of Revenue by Funders

Lenders were basing demands on gross revenue rather than true cash flow, resulting in unrealistic payment requirements and accelerated financial strain.

Immediate Operational Paralysis from UCC Lien

The UCC filing froze receivables and disrupted critical workflow, halting jobs and threatening payroll. This became a central factor in the negotiation approach.

Restructuring Strategy

Our approach focused on aligning repayment obligations with reality:

1. Lender-Grade Repayment Model

We rebuilt the financial structure using accurate cash-flow timing to show what the business could realistically support.

2. Short-Term Inability, Long-Term Viability

The model demonstrated why current payments were impossible while proving the company’s ability to perform under restructured terms.

3. Financial Guidance for Legal Counsel

We equipped the client’s attorney with clear financial evidence to support hardship arguments and strengthen negotiation credibility.

4. Sustainable, Data-Aligned Terms

We designed repayment terms that matched operational realities, ensuring funders could recover while the business remained stable.

5. Controlled, Professional Communication

All dialogue was routed through proper legal and financial channels, shifting negotiations from pressure and assumptions to facts and data.

Breakthrough & Negotiation Outcomes

Negotiations improved once funders understood the corrected financial narrative. Results included a 43% payment reduction, 7% balance reduction, release of all UCC liens, and stays on lawsuits.

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Client Transformation

How They're Doing Today

The company stabilized operations, preserved payroll, maintained vendor relationships, and prepared for higher-margin work. What began as a near-shutdown scenario became a controlled recovery supported by fact-driven strategy.

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