A New York appellate court has upheld a ruling in favor of NewCo Capital Group LLC in its case against SPE Trading, Inc. and its affiliates. The court's decision, issued on June 26, 2026, confirms that the defendants breached a revenue purchase agreement, resulting in damages and attorneys' fees awarded to NewCo. This ruling is significant as it clarifies the legal standing of revenue purchase agreements, which are often used in business financing.
The ruling affects NewCo Capital Group, a financial entity that provides funding to businesses in exchange for a percentage of their future revenues. The defendants in the case include SPE Trading, Inc., along with several related entities and a personal guarantor, Jaime Rafael Soto. The court's decision underscores the importance of adhering to contractual obligations and the legal implications of failing to do so.
Background
NewCo Capital Group LLC filed a lawsuit against SPE Trading, Inc. and its affiliates after they allegedly defaulted on a revenue purchase agreement. This agreement involved NewCo advancing funds to the defendants in exchange for a percentage of their future revenues until a specified amount was paid back. Jaime Rafael Soto acted as the guarantor for the agreement, meaning he was personally responsible for ensuring the defendants fulfilled their obligations.
The dispute arose when the defendants failed to make timely payments as outlined in the agreement. NewCo Capital Group initiated legal action, claiming breach of contract and sought summary judgment, which is a legal determination made by the court without a full trial. The Supreme Court of Monroe County ruled in favor of NewCo, leading to the defendants' appeal.
The Ruling
The Appellate Division of the Supreme Court of New York affirmed the lower court's ruling, stating that NewCo Capital Group had established the existence of a valid contract, its performance under that contract, and the defendants' breach of the agreement. The court noted, "Plaintiff established that an agreement existed, it performed under the agreement, defendants breached the agreement, and plaintiff sustained damages."
Judge Montour, along with Judges Ogden, Greenwood, Nowak, and Hannah, agreed that the defendants' claims regarding the validity of the business records submitted by NewCo were unfounded. The court ruled that the affidavit from NewCo's manager, which detailed the company's record-keeping practices, was sufficient to support the claims made in the lawsuit. The court concluded, "We reject defendants' contention that plaintiff's documentary submissions did not meet the statutory requirements for the admission of a business record under CPLR 4518 (a)."
Impact
This ruling has significant implications for businesses that enter into revenue purchase agreements. It reinforces the enforceability of such agreements and clarifies the legal standards for determining whether a transaction constitutes a loan or a revenue purchase. The court's decision indicates that if a transaction is not classified as a loan, it cannot be deemed usurious, which is a critical distinction in business financing.
The ruling also highlights the importance of clear communication and adherence to contractual terms. Businesses must ensure they understand the implications of the agreements they enter into, particularly regarding payment obligations and the consequences of default. This case serves as a reminder that failure to comply with contractual terms can lead to legal action and financial repercussions.
What's Next
The defendants may seek further legal recourse, including the possibility of appealing the decision to a higher court. However, details were not available in the court filing regarding any related cases or additional appeals currently pending.