In “Madden Creates More Uncertainty for Marketplace Lenders,” a Law360 article, Joseph Cioffi and Massimo Giugliano discuss the ongoing case of Madden v. Midland Funding and its impact on the marketplace lending. The authors explain the significance of the initial decision by the Second Circuit in 2015, which created substantial risk for marketplace lenders that rely on a partner bank origination model to avoid state usury caps, and analyze the potential impact of a subsequent decision striking down a choice of law clause often relied on by lenders to guard against usury claims. The consequences of the decision – both intended and perhaps unintended by the court – are considered from several angles, including from the perspective of investors in securities backed by marketplace loans. To read the full article, click here.
Massimo Giugliano is an associate in the Insolvency, Creditors’ Rights & Financial Products Practice Group of Davis & Gilbert. Massimo advises financial institutions and service sector businesses in connection with a broad range of insolvency-related matters and credit transactions.