5-location restaurant kept all leases through workout
COVID-era SBA + two MCAs threatened operating cash. We coordinated SBA workout with MCA settlement to preserve every location.
Five locations. Two MCAs. One COVID-era SBA loan.
A second-generation restaurant group with five Long Island locations had a clean balance sheet pre-pandemic. The COVID-era EIDL was used as bridge capital while indoor dining recovered, then two MCAs were taken in 2023 to ride out a slower-than-expected fall season. By Q1 2024 the operating cash was no longer covering payroll across the locations.
The owners came to us before missing payments — but with the calendar showing a default in 30 days. The hardest constraint was that two of the leases had cross-default clauses that would terminate operations across all five locations the moment any creditor sued.
- $320K SBA EIDL with personal guarantees on both owners
- Two MCAs at $50K and $50K with 1.42 factor each
- Cross-default clauses in two of the five leases
- 30 days to first missed MCA debit at current cash velocity
Three positions. Three funder profiles. Three negotiation tracks.
9 mo, day-by-day
Intake + same-day landlord outreach
Five-store P&L roll-up. Engaged both at-risk landlords directly the same week.
Standstill on both MCAs
Cease-debit letters delivered. Cash diverted to rent, payroll, food cost first.
Landlord forbearance signed
Both at-risk landlords accepted a 90-day cure plan. Lease default removed from the table.
MCA #2 settled at 33%
Per-store renewal funder closed at 33% — first deal cleared.
MCA #1 settled at 38%
Group-level funder accepted 38% of current balance. Full release of cross-collateralization.
All 5 leases retained
Every lease intact. Group cash-flow positive again with sustainable per-store debt service.
We thought we were going to lose everything. Delancey kept us open and gave us a runway we could actually breathe on.
What the next 36 months look like
Locations operating
All five Long Island locations remained open through the workout.
Cross-default fired
No lease terminated; the cross-default protections in two leases never triggered.
EIDL deferment
SBA Treasury approved a 12-month deferment with back-end re-amortization on the COVID EIDL.
Total reduction
Combined MCA settlement + SBA modification produced a 77% reduction against claimed payoff.
SBA hardship modification + MCA standstill, in parallel.
We filed a hardship modification on the EIDL within the first week — Treasury accepted a 12-month deferment and re-amortization on the back end. Simultaneously, we negotiated standstill on both MCAs and opened settlement discussions citing the SBA's modification as evidence of documented hardship.
MCA #1 settled at 22¢ on the dollar in month 6. MCA #2, which had been more aggressive, settled at 25¢ in month 9 after our team filed a counter to a venue motion they had attempted to leverage. Total settled cost across MCAs: $24K against $100K claimed. EIDL re-amortized at a payment the cash flow could absorb.
Every location kept. Every employee retained.
All five locations operating today. Every employee retained through the workout. The cross-default clauses never fired because no creditor ever filed suit — both MCAs settled before the standstill expired, and the SBA modification removed the EIDL from the active default category.
The owners report that the cash flow runway has stabilized to the point where they're considering opening a sixth location in 2026. The single biggest factor in the outcome was sequencing — settling the MCAs against a documented SBA modification was significantly easier than fighting them on their own terms.
Numbers at a glance
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Names withheld for client privacy. Industry, location, and dollar figures are accurate. Past results do not guarantee future outcomes — every case is fact-specific. Delancey Street is not a law firm.
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