The Supreme Court of New York, Nassau County, recently held that a plaintiff was entitled to default judgment because, inter alia, the defendants’ civil and criminal usury defenses were meritless. See Merchant Cash & Capital, LLC v. Randa’s Baker, Inc. and Abdulla, Index No. 603446-16, 2016 BL 312753 (Sup. Ct. Sept. 20, 2016). The case arises out of an agreement between the defendant bakery and the plaintiff investor, whereby the defendant agreed to sell $98,670 of its future receivables/revenue in return for an up-front payment by plaintiff of $71,500. An individual guaranteed the agreement on behalf of the bakery. Plaintiff commenced this action against the bakery and the guarantor, alleging that the defendant bakery was diverting funds from its business bank account, thereby interfering with payments to the plaintiff. After the defendants failed to answer, the plaintiff moved for a default judgment, which the defendants opposed. Among their other defenses, the defendants claimed that the agreement was civilly and criminally usurious. The court rejected the defendants’ defenses and entered judgment for the plaintiff. In addition to finding that the defendants did not controvert service and provided no justifiable excuse for their failure to answer, it found that they failed to provide a meritorious defense. First, it held that a corporation is prohibited from asserting the civil usury defense, as is an individual guarantor of a corporate obligation. Second, although the defendants also argued that the agreement could have resulted in annual interest in excess of 25%, in violation of New York’s criminal usury statute, the court noted that the statute only applied to a “loan or forbearance.” Here, the agreement was for the purchase of future receivables, and “[a]s onerous as a repayment requirement may be, it is not usurious if it does not constitute a loan or forbearance.”