Crown Financial, LLC vs. Drivetrain, LLC Illustrates ‘Harsh’ Consequences for Lending to Unlicensed Contractors

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Edward Schnitzer of Montgomery McCracken Walker & Rhoads breaks down the decisions in a recent bankruptcy case to demonstrate the importance of performing due diligence to ensure clients are conducting business legally and that any customer invoices you purchase are legally enforceable.

The Third Circuit of the U.S. Court of Appeals’ recent decision in Crown Financial, LLC vs. Drivetrain, LLC (In re Abeinsa Holding Inc.) reminds parties that a claim on a purchased invoice is only as good as the underlying claim. If the assignor of the invoice is not in compliance with the applicable law that prejudices the right to seek compensation, that impairment will also affect the assignee’s right to recover both outside and inside a bankruptcy.

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