The TRO Is the Emergency Brake in MCA Litigation
When a merchant cash advance company freezes your bank account or accelerates daily debits to a pace that will exhaust the account within days, ordinary litigation timelines are irrelevant. A temporary restraining order is the mechanism designed for exactly this moment — an emergency judicial intervention that can suspend enforcement activity before any hearing on the merits occurs. Understanding how TROs work in the MCA context, and what they can and cannot accomplish, is the difference between preserving your business and watching it fail while waiting for a scheduled hearing date.
What a TRO Can Actually Stop
In the MCA context, a TRO can restrain the funder from initiating further ACH debits against your account, from enforcing a confessed judgment through levy or restraint, from taking action under a personal guarantee, or from filing additional UCC liens. The court’s order runs to the funder and, in some cases, directly to your bank. Where the bank has received a restraining notice from the funder and frozen your accounts, a TRO can require the bank to lift the freeze and restore access to operating funds.
What a TRO cannot do is eliminate the underlying debt or resolve the merits of the dispute. It is a temporary measure, lasting no more than fourteen days under federal Rule 65 without notice, and shorter in some state court contexts.
The Two Things You Must Show
To obtain a TRO, you must demonstrate irreparable harm and a likelihood of success on the merits — or at minimum a serious question going to the merits combined with a balance of hardships that tips toward the movant. In MCA cases, irreparable harm is often the easier showing: daily debits depleting an account, payroll unable to be met, business cessation imminent. These are not speculative injuries. They are observable events with a calculable timeline.
The merits question is harder and more case-specific. Courts have found a sufficient merits basis for TRO relief where the agreement appeared to be a criminally usurious loan, where the reconciliation clause had been ignored by the funder despite formal requests, or where the COJ was entered in apparent violation of the 2019 statutory amendment. The strength of the merits showing determines whether the TRO will issue and whether it will be extended into a preliminary injunction.
Notice and the Ex Parte Option
A TRO can be obtained without notice to the other side — on an ex parte basis — where giving notice would itself cause harm. In practice, this means that where notifying the funder of the TRO motion would prompt it to accelerate enforcement or transfer assets before the court acts, the movant can appear before a judge and seek relief before the funder knows the motion has been filed. Ex parte TROs are scrutinized carefully and courts require a clear showing that the ordinary notice requirement would frustrate the purpose of the motion.
The Bond Requirement and Its Implications
Courts issuing TROs typically require the movant to post a security bond in an amount sufficient to compensate the enjoined party for any damages suffered if the TRO turns out to have been wrongly granted. In MCA litigation, the bond requirement can create a practical obstacle for merchants who are seeking relief precisely because their funds are depleted. Courts have discretion to set a nominal bond where the equities strongly favor the movant and where the practical effect of a substantial bond would be to deny relief entirely — but that discretion is not guaranteed. The bond amount is worth addressing specifically in the TRO papers.
