Kapitus lawsuit: what First Department MCA opinions actually hold

Kapitus lawsuit searches usually find private MCA servicing disputes, not FTC or AG enforcement. Ragtime Gourmet, Point Blank, Steenbok, and their limits.

Updated 2026-10-30

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By Anonymous MCA industry contributor Research, writing and editorial review · MCA sales background

Searches for Kapitus lawsuit usually surface private commercial collection and contract disputes involving Kapitus Servicing, Inc. (formerly Colonial Funding Network, Inc.) and related Kapitus / Strategic Funding Source captions, not a Federal Trade Commission or New York Attorney General industry-wide enforcement action like the public Yellowstone Capital lawsuit track. This page summarizes what identifiable New York Appellate Division and trial-court opinions establish, and what a single order does not prove about your file.

Editorial update: 2026-10-27 · Desk research of published court opinions and public docket indexes only. Not legal advice, not affiliated with Kapitus, Kapitus Servicing, Inc., Strategic Funding Source, Inc., Colonial Funding Network, Inc., Core Business Finance, or Fig Capital, LLC.

Quick answer

Question	What the public record supports on this page
Who appears in captions?	Filings commonly name Kapitus Servicing, Inc. f/k/a Colonial Funding Network, Inc. as servicer/agent; older captions also use Strategic Funding Source, Inc. d/b/a Kapitus. Originating funders in particular opinions include Core Business Finance and Fig Capital, LLC
Is there an FTC / NY AG “Kapitus refund” program?	No equivalent public FTC redress or NY AG debt-cancellation program for Kapitus is described in the sources checked for this page
Pattern in many opinions	Kapitus (as servicer) seeking to enforce a revenue-based / receivables-purchase agreement and personal guarantee; merchants raising criminal usury / “true loan” defenses
Recent First Department example	Kapitus Servicing, Inc. v. Ragtime Gourmet Corp. (2025 NY Slip Op 05921, Oct. 28, 2025): Appellate Division affirmed denial of Kapitus’s summary-judgment motion because fact issues remained on whether the agreement was a usurious loan or an enforceable receivables purchase
Does an SJ denial wipe Kapitus balances?	No. Denying summary judgment (or a motion to dismiss) means the movant failed a procedural burden that day, not that every Kapitus-related obligation is invalid

If you were served, start with the lawsuit hubs: Merchant cash advance lawsuit and Served with an MCA lawsuit: first 30 days.

Why Kapitus lawsuit results look different from Yellowstone

Yellowstone Capital appears in agency enforcement materials (FTC settlement/refunds; later NY AG settlement with debt cancellation for covered Yellowstone entities). Kapitus results more often look like:

Servicer-as-plaintiff suits against a merchant and guarantor for alleged breach of a receivables-purchase / revenue-based factoring agreement
Motions for summary judgment or motions to dismiss that turn on whether the agreement is a true sale of future receipts or a loan that may be subject to New York’s criminal-usury framework
Caption names that can differ from the brand merchants recognize, Kapitus Servicing, Colonial Funding Network, Strategic Funding Source d/b/a Kapitus, plus an originating funder such as Core or Fig Capital
Occasional default-judgment practice where courts require strict proof and may deny entry (or dismiss) when the papers fall short

Treat headlines and docket snippets as case-specific. An order in one merchant’s file does not set your settlement percentage, defense, or deadline.

Case spotlight: Ragtime Gourmet: summary judgment denied (2025)

On October 28, 2025, the Appellate Division, First Department, decided Kapitus Servicing, Inc. v. Ragtime Gourmet Corp./Joe-Le Holding Corp. (2025 NY Slip Op 05921).

According to the published opinion:

Kapitus Servicing (f/k/a Colonial Funding Network) sued as servicer/agent for nonparty Core Business Finance
Under the agreement (signed by Angelo Gurino for the company and as guarantor), Core paid $103,500 in exchange for $132,480 of future receipts, remitted as a percentage of daily receipts through a processor
Kapitus moved for summary judgment after alleged shortfalls and fees; Supreme Court (New York County) denied the motion
The First Department affirmed, holding there were issues of fact whether the cash-advance agreement was a loan that may be criminally usurious, or an enforceable sale and purchase of receivables (citing Kapitus Servicing Inc. v. Point Blank Constr., Inc., 221 AD3d 532 [1st Dept 2023], among other authorities)
Factors the court treated as pointing toward a loan included bankruptcy-related recourse and a personal guaranty with a security interest in personal property on default
Factors pointing toward a sale included an indefinite remittance term until the purchased amount was received, and daily remittance limited to a percentage of receipts (even without a full reconciliation clause)
Dismissal of a separately named Jo-Le Holding entity was affirmed where that entity was never served

What this decision does not establish

It does not hold that every Kapitus / Core agreement is void or usurious
It does not set a “typical” Kapitus settlement rate or win rate for merchants
It does not pause deadlines in a different Kapitus suit against another merchant
It does not replace reading your summons, contract, guarantees, processor history, and payment ledger

Case spotlight: Point Blank Construction: motion to dismiss denied (2023)

On November 28, 2023, the First Department decided Kapitus Servicing, Inc. v. Point Blank Construction, Inc. (2023 NY Slip Op 06087 / 221 AD3d 532).

According to the published opinion:

Kapitus sued as servicer for nonparty Fig Capital, LLC under a revenue-based factoring agreement; Fig Capital purchased $96,520 of future receivables, with Kapitus to collect 12% of daily receivables by ACH from a Florida account
Defendants moved to dismiss; Supreme Court denied the motion; the Appellate Division affirmed
Subject-matter jurisdiction was upheld under Business Corporation Law § 1314(b)(1) on the theory that the contract was made in New York (last act: sending funds from New York)
Criminal-usury dismissal failed because the record did not show a loan “on the face of the agreement as a matter of law”, bankruptcy recourse suggested a loan, while an indefinite repayment term suggested a sale, and reconciliation rights were unclear on the face of the papers

Again: denying a motion to dismiss keeps the case alive for further proof. It is not a final industry ruling that every Kapitus-serviced MCA is enforceable, or that every one is void.

Case spotlight: Steenbok: merchant SJ denied; not presently shown usurious (2021)

On June 22, 2021, the First Department decided Strategic Funding Source, Inc. d/b/a Kapitus and Kapitus Servicing, Inc. v. Steenbok, Inc. (2021 NY Slip Op 04002).

According to the published opinion (as reported):

The parties entered eight merchant agreements for restaurants: cash advances repaid as a percentage of credit-card receivables through a processor bridge account
After the processor stopped remitting Kapitus’s percentage and began depositing all receivables to the merchants, Kapitus began debiting the merchants’ account
Defendants moved for summary judgment dismissing the complaint; the Appellate Division affirmed denial of that motion
On that record, repayment was contingent on future receivables existing, so the cash advance was not treated as a usurious loan (citing Champion Auto Sales, LLC v. Pearl Beta Funding, LLC, 159 AD3d 507 [1st Dept 2018])
Factual questions remained about processor conduct, contractual percentages, alleged breach, and debit practices; discovery was outstanding

Steenbok shows why outcomes turn on agreement text and proof, not brand names alone, and why a merchant SJ win is not automatic even when processor mechanics are disputed.

Related trial-court note: Temple Builders default denied (2025)

In Kapitus Servicing, Inc. v. Temple Bldrs., LLC (2025 NY Slip Op 31696(U), N.Y. County, May 8, 2025), Kapitus moved under CPLR 3215 for a default judgment for unpaid receivables plus ACH, blocked-account, and default fees. The published decision denied the default motion and dismissed the action on the papers then before the court. That result is proof-specific to that file; it does not cancel other Kapitus balances or create a refund program.

What to do if you were served by Kapitus / Colonial / Strategic Funding

Calendar every deadline on the summons and any motion papers, defaults move fast
Match the caption to your contract: Kapitus Servicing vs. Colonial Funding Network vs. Strategic Funding Source d/b/a Kapitus, plus any originating funder named in the agreement
Preserve the receivables agreement, personal guaranty, ACH authorizations, processor statements, reconciliation requests, and fee ledgers
Read MCA lawsuit first 30 days and what is MCA settlement before assuming any “industry average” discount
Get jurisdiction-specific advice on your papers; this page is desk research, not representation

FAQ

Is there a Kapitus FTC refund or NY AG debt-cancellation program?

Not in the public sources checked for this page. Do not confuse Kapitus private litigation with the Yellowstone Capital FTC / NY AG track.

Does “Kapitus lawsuit” mean my agreement is automatically void?

No. First Department opinions such as Ragtime Gourmet and Point Blank show courts often leave loan vs. sale characterization for further fact-finding. Steenbok shows other records can support treating a cash advance as not a usurious loan. Outcomes are case-specific.

Why do captions name Colonial Funding Network or Core Business Finance?

Kapitus Servicing has appeared as formerly known as Colonial Funding Network and as servicer/agent for originating funders (for example Core Business Finance or Fig Capital in the opinions above). Read the agreement and the complaint caption together.

Can a settlement company or attorney help while a suit is pending?

Sometimes parties still negotiate after filing, but court deadlines continue unless formally changed. Compare written scopes and fees. See attorneys vs settlement companies and our MCA settlement overview.

Where else should I read on this site?

Start with the merchant cash advance lawsuit hub, MCA debt relief options, and funder profiles. For company comparisons, see reviews.

Related funder lawsuit pages

Kapitus is one of the larger funders in our MCA lawsuit tracker, where you can compare its cases with others.

Sources checked October 27, 2026

Desk research only. We did not contact Kapitus for this update, and we did not review any merchant’s private claim file. This is not a complete litigation search or a prediction about your case.

Takeaway

Treat “Kapitus lawsuit” as a search for private commercial litigation. Often Kapitus Servicing enforcing receivables-purchase agreements in New York courts, not an automatic industry refund. Read the caption, the deadline, and the actual order. Ragtime Gourmet, Point Blank, and Steenbok show why loan-versus-sale proof matters; they do not cancel other Kapitus balances or set a win rate.

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