TROs Issued Against You Are Also Dissolvable
The MCA company is not always the party seeking injunctive relief. In some cases, an MCA funder obtains a TRO against the merchant — freezing accounts, restraining asset transfers, or prohibiting the merchant from entering new financing arrangements. When that happens, the merchant’s priority is dissolution, not merely defense. A TRO operates on a short timeline by design, and the window to dissolve it before it converts into a preliminary injunction carries consequences that last through the full litigation.
Fact 1: The TRO Has a Built-In Expiration
Under Federal Rule of Civil Procedure 65, a TRO issued without notice to the opposing party expires automatically after fourteen days unless the court extends it for good cause or the parties consent to an extension. State court rules vary, but similar short-duration limits apply in New York and most other jurisdictions. This built-in expiration is important: if you do nothing, the TRO does not simply continue indefinitely. What it does instead is convert to a preliminary injunction hearing, which requires the court to make a more thorough finding of likely success on the merits. A preliminary injunction that issues after a contested hearing is harder to dissolve than a TRO.
Fact 2: You Can Move to Dissolve Before the Expiration
The respondent may move to dissolve a TRO at any time after it issues, and the court must hear the motion at the earliest practicable date. A motion to dissolve places the burden back on the party who obtained the TRO to demonstrate that the legal requirements for injunctive relief are actually met. This is distinct from simply waiting for the TRO to expire — an active dissolution motion can produce relief faster and creates a record that strengthens your position in the preliminary injunction hearing that follows.
Fact 3: Lack of Notice Is a Ground for Dissolution
An ex parte TRO — one obtained without notice to the opposing party — is subject to immediate challenge based on the adequacy of the notice question. Courts issuing ex parte orders must be satisfied that notice was impossible or would cause the requested relief to be frustrated. Where the funder obtained a TRO without notice and the factual basis for the impossibility-of-notice claim is weak, that procedural defect can support rapid dissolution.
Fact 4: The Underlying Agreement’s Legality Is Directly Relevant
One of the core requirements for injunctive relief is likelihood of success on the merits. If the MCA agreement is an illegal, void contract — a criminally usurious loan under New York law — the funder has no meritorious claim, and therefore no basis for injunctive relief. Raising the usury defense in opposition to a TRO or preliminary injunction is both procedurally appropriate and, in the current judicial climate, increasingly persuasive.
Fact 5: The Bond May Be Insufficient to Cover Your Actual Damages
When a court issues a TRO against you and requires the funder to post a bond, the bond amount reflects the court’s estimate of potential damages from a wrongly issued order. If the TRO causes you to lose contracts, forfeit leases, or default on obligations while the account freeze is in place, and the eventual award of wrongful injunction damages exceeds the bond, collection may be difficult. At the TRO hearing, argue specifically and quantifiably for a bond amount that reflects the actual daily cost of the restraint to your business.
Fact 6: Compliance Is Not Admission
Complying with the terms of a TRO while opposing it does not constitute an admission that the funder’s underlying claims are valid. Courts recognize that compliance is often compelled by the consequences of contempt, not by agreement. The record of your opposition — the motion to dissolve, the papers opposing preliminary injunction — preserves the challenge even while you operate within the restraint’s terms.
Fact 7: A TRO Can Be Challenged on the Bond Adequacy Question
Separately from the merits, a TRO can be challenged where the funder failed to post a required bond or posted an inadequate one. Courts have dissolved TROs on this procedural basis alone, without reaching the merits, where the bond requirement was a condition of issuance and that condition was not satisfied.
Fact 8: Attorney’s Fees Are Available If the TRO Was Wrongfully Obtained
Where a TRO is dissolved and the injunction ultimately fails, the respondent may recover attorney’s fees and costs incurred in opposing the wrongful restraint, either through the bond mechanism or through fee-shifting statutes where applicable. In UDAP cases, fee-shifting statutes in California and New Jersey make the recovery of litigation costs a realistic outcome even where damages are modest. A first call costs nothing, and understanding what recovery is available shapes the economics of how aggressively to contest the injunction.
