Thomas A. Sesny, Jr.
Attorney at Law · MBA · Austin, Texas
Your financing is out of control.
Your creditors are calling.
What you do next is important.
This website is the professional and reference site for Thomas A. Sesny, Jr., attorney at law and author of The Structure of Business Financing, Second Edition, a plain-language reference on business financing, creditor priority, merchant cash advances, tax liens, trust-fund claims, and what happens when multiple creditors are competing for the same money.
Whether you are a business owner trying to understand what is happening to your company, or an attorney trying to untangle a multi-creditor priority dispute, the central issue is the same: distressed business outcomes are determined by structure, not pressure.
About
Thomas A. Sesny, Jr. has practiced law for more than thirty years. He holds both a J.D. and an MBA, and his work focuses on the point where business financing, creditor enforcement, tax liens, trust-fund obligations, and litigation pressure collide.
Debt problems are rarely just debt problems. A business may have a secured lender, merchant cash advance companies, unpaid vendors, unpaid subcontractors, tax liens, judgments, and operating pressure all moving at the same time. The legal question is not simply who is owed money. The legal question is who has the right to reach a particular asset, fund, receivable, account, or stream of payments — and in what order.
The Structure of Business Financing, Second Edition puts that framework in one place, in plain language. The book explains how business financing is built, how it fails, and what the law does with it when multiple creditors compete for the same value.
This site serves two purposes. First, it identifies the types of business financing and creditor-priority situations addressed in the framework. Second, it provides a companion reference to The Structure of Business Financing, Second Edition for business owners, attorneys, and advisors trying to understand the structure of a distressed business situation.
Thomas A. Sesny, Jr. is available in an advisory and consulting capacity for analysis, strategy, creditor-priority review, financing-structure review, source-of-funds analysis, waterfall analysis, MCA and secured-creditor issues, construction trust-fund issues, and attorney support on defined matters.
Situations
Most people who find this site are not browsing. They are looking for answers to a specific problem. Here are the situations this site and this practice are built to address.
MCA Withdrawals
You took one or more merchant cash advances. The daily withdrawals are consuming your cash flow before you can use it. You may have multiple funders drawing from the same account. You are not sure who has priority or what rights each funder actually has.
Multiple Creditors, Same Money
You have a bank, secured lenders, MCA companies, judgment creditors, and possibly the IRS all pursuing the same assets or the same cash flow. You do not know who is legally entitled to what, or in what order.
Construction: IRS, Subs, MCAs
You are a contractor with unpaid subcontractors, IRS payroll tax issues, and MCA agreements drawing from project funds. You are trying to understand whether the money that came in for a specific job belongs to the subs, the IRS, or the funders.
Things Are Getting Out of Control
Your business is still operating but the cash situation is deteriorating. Creditors are getting aggressive. You are making decisions based on who is loudest rather than who has the strongest legal right. You need someone to tell you where you actually stand.
Starting Out or Growing
You are building a business and want to understand how financing decisions compound over time before you make them. The right capital structure from the start costs a fraction of the wrong one corrected later.
Already in Crisis
Things have already gone sideways. You have judgments, liens, failed payments, and creditors taking action. You need someone to map the situation, identify what can still be done, and help you understand your options before you run out of them.
Priority Dispute You Did Not Expect
You are representing a creditor or a debtor in a collection matter and the priority picture is more complicated than it looked. Multiple secured creditors, IRS liens, trust fund claims, and MCA UCC filings are all pointing at the same assets.
MCA Enforcement or Defense
You are defending against an MCA enforcement action or pursuing one and you need someone who has been inside these cases — who understands the contracts, the recharacterization arguments, the reconciliation issues, and where the funder's priority actually sits.
Construction Multi-Creditor Case
You have a distressed construction company with IRS NFTLs, prior secured lenders, unpaid subcontractors asserting trust fund claims, stacked MCA agreements, and judgment creditors. You need the priority analysis mapped before the next hearing.
Priority Analysis and Attorney Support
You need someone who can review the creditor landscape, build the waterfall, identify the priority issues, and give you a clear analytical picture you can use in negotiation or litigation. Analytical support for counsel handling the matter.
The Book
The Structure of Business Financing, Second Edition is a plain-language reference for business owners, attorneys, and advisors dealing with business financing decisions, creditor pressure, MCA obligations, lien priority, tax liens, trust-fund claims, and distressed-business structure.
The book exists because these issues are usually explained in pieces. Financing books explain how to get capital. Collection materials explain creditor remedies. Legal treatises explain lien law. None of those resources, standing alone, explains the sequence owner-operated businesses actually experience: how capital becomes pressure, how pressure becomes default, how default becomes enforcement, and how enforcement becomes a priority dispute.
This book is not a motivational business book. It is not a law review article. It is not a substitute for legal advice. It is a framework for understanding how business financing is structured, how it fails, and what the law does with the remaining value when multiple creditors are competing for the same money.
Part One traces the progression of business financing from the most accessible and flexible forms of capital through the most restrictive and dangerous. Business credit cards. Purchase money financing. Lines of credit. Term loans. Asset-based lending. Factoring. Private lending. Merchant cash advances. Stacking. Each chapter explains how the instrument works, what it creates, what happens when it is misused, and how it sets up the next problem. By the end of Part One the reader understands exactly how a business ends up in a stacked MCA situation with federal tax liens, unpaid subcontractors, and a creditor race — not because anything went dramatically wrong, but because each decision made sense at the time it was made.
Part Two covers what happens when the business is distressed and multiple creditors are competing for the same money. The creditor landscape. UCC and lien mechanics. Federal tax liens. Priority as the turning point. MCA enforcement — the pitch, the reality, the death spiral, the enforcement speed, and what the MCA company actually purchased. The distribution waterfall. Junior creditor reality. Borrower defenses. Forum control. Negotiating under priority pressure. Designing the reset. The Second Edition adds a source-of-funds analysis establishing that a gross deposit is not a receivable available to creditors — one of the most important and least-understood analytical points in the entire multi-creditor distress framework.
This is a book you read when you want to understand what is happening and why. It is also a book you keep on your desk when you are inside one of these situations and need the analytical framework in front of you.
The sections below are a sample of the issues covered in The Structure of Business Financing, Second Edition. Each topic introduces a major part of the framework. For fuller treatment, definitions, examples, and the complete explanation, use the book itself.
A business does not arrive at a merchant cash advance on its first financing decision. It gets there through a sequence. Each step reduces flexibility and increases the lender's control. Understanding the sequence explains why distressed businesses make the financing decisions they make — and what those decisions create legally and practically.
Between and alongside these steps, many businesses create a parallel financing structure they do not recognize as financing: unpaid payroll taxes, unpaid vendors, unpaid subcontractors, stretched payables. The business keeps cash by not paying obligations it should have paid. Economically it is using someone else's money. Legally, some of that money carries consequences far more dangerous than ordinary debt. Unpaid payroll taxes create personal federal exposure. Unpaid subcontractors on construction projects may be trust fund beneficiaries. Involuntary capital is cheap only until it is enforced.
Most businesses do not fail suddenly. They fail in a sequence. The final event — the frozen account, the lawsuit, the failed payroll, the IRS notice — looks sudden because that is when everyone else sees it. Inside the business, the structure was weakening for months or years before the visible break.
The sequence begins with drift — the period when the business is not yet in crisis but is no longer moving with control. Revenue may still be coming in. Nothing has broken loudly enough to force a decision. But the margins are thinner, the records are behind, the cash is tighter, customers are paying slower, and vendors are less patient. The business still looks alive, but the range of safe decisions is shrinking. Drift is dangerous because it feels like stability.
Capital is time: the ability to absorb a delayed payment without panic, to finish a job without borrowing at emergency rates, to make payroll and taxes before the customer pays. A business without capital does not merely have less money. It has fewer choices. Every problem becomes urgent because there is no cushion between the problem and default. When capital is thin, decisions change — and corner-cutting stops being an exception and becomes the business model.
At some point the nature of the problem changes. Once the business cannot pay everyone, every payment decision has legal significance. Who got paid? From what funds? Were the funds trust funds? Were payroll taxes withheld and unpaid? Were receivable proceeds subject to a lien? Did the business pay a junior creditor while senior claims were outstanding? Those questions are not answered by intention. They are answered by structure. The owner ranked creditors by pain. The law ranks them by legal right.
The creditor landscape is not flat. Each creditor arrives with different tools, different timelines, and different legal rights. A distressed business owner ranks creditors by pressure. The law ranks them by legal right. Those two rankings rarely match.
A secured creditor has a legal claim against specific property — created by agreement and protected through proper perfection. An unsecured creditor has no such property claim. Its debt may be valid. Its legal position may still be weak. Secured creditors often appear calmer because their leverage is already documented. A creditor with no collateral moves faster because waiting may leave it with nothing.
A judgment creditor begins as an unsecured creditor that sued and won. Once the judgment exists, the creditor can conduct post-judgment discovery, garnish bank accounts, record an abstract creating a lien on non-exempt real property, and seek a receiver. But the judgment does not make the creditor first. Those remedies do not erase superior claims. Judgment creditors often move fast because they know their position may be fragile and waiting may mean watching senior claimants consume the remaining value.
The Texas Construction Trust Fund Act creates trust obligations with respect to certain construction payments. When funds are received for construction work, those funds may be held for the benefit of subcontractors, suppliers, and others protected by the statute. This is not simply a lien — a trust says the money was not beneficially the debtor's to use for general purposes. If construction trust funds are involved, the threshold question is whether those funds were ever beneficially the debtor's property at all, not which creditor filed first.
The IRS does not need to sue before a federal tax lien arises. Once the tax is assessed and demand is made, the lien arises by operation of law, attaching broadly to all property and rights to property. MCA funders combine features of several creditor types while insisting on a purchase characterization. They move quickly when payments fail. Their daily withdrawal system functions as a monitoring system — a failed debit is immediate information. But MCA funders are often junior to prior secured creditors, federal tax liens, and statutory trust fund claims regardless of how fast they move.
Owing money is not the same as having a legal claim against property. A creditor with only a debt has a claim against the debtor. A creditor with a lien has a claim against property. That difference becomes everything when the money runs out.
Article 9 of the Uniform Commercial Code governs most security interests in personal property. A secured transaction begins with attachment — the security interest becomes enforceable between debtor and creditor. Then comes perfection, which protects the secured party against other creditors and third parties. For most business collateral, perfection requires filing a UCC-1 financing statement in the proper jurisdiction with the correct debtor name and collateral description. Filing is simple in concept but unforgiving in practice: an error in the debtor name, wrong jurisdiction, or lapsed filing can cost the creditor the priority position it thought it had.
Among competing perfected security interests in the same collateral, the first to file or perfect generally has priority. Purchase-money security interests may receive super-priority in the specific collateral they financed — a lender financing one piece of equipment may be senior to an earlier blanket lienholder in that specific asset. Blanket liens covering all business assets are broad but not absolute. They still depend on attachment, perfection, collateral coverage, control, and tracing. A blanket lien has to be applied, not merely announced.
A lien attaches to the debtor's property. A trust removes certain money from the category of debtor property in the first place. A secured creditor's blanket lien, a UCC-1 filing on receivables, and a judgment creditor's sweep all depend on reaching the debtor's property. If construction project funds are trust funds, the threshold question is whether those funds were ever beneficially the debtor's property — not which creditor filed first.
The IRS is not just another creditor. Its rights arise differently, its lien operates differently, and its collection tools are different. A bank has loan documents. The IRS has federal law.
When the tax is assessed and demand for payment is made, the federal tax lien arises by operation of law — not when the Notice of Federal Tax Lien is filed. The NFTL gives public notice and affects priority against certain third parties, but the underlying lien exists from assessment. A creditor who finds no recorded NFTL and concludes there is no IRS claim may be wrong. The lien attaches to all property and rights to property belonging to the taxpayer, including after-acquired property.
The priority analysis between the federal tax lien and competing private creditors is not resolved by comparing filing dates in isolation. A competing lien must be sufficiently choate — specific as to the identity of the lienholder, the amount owed, and the property subject to the lien. A floating or future claim may lose priority to the federal tax lien even if the private filing date was earlier. A prior UCC filing does not automatically beat the IRS without completing the full choateness and property-specific analysis.
Construction trust funds and payroll-tax trust funds operate on different timelines and must be tracked independently. Construction trust funds arise when project money is received from an owner. Payroll-tax trust funds arise when wages are paid and taxes are withheld. A contractor may be dealing with both simultaneously. An MCA company withdrawing daily does not stop either clock. The same account may contain funds subject to three different legal regimes at once: ordinary business revenue, construction trust funds, and payroll-tax trust funds. A creditor who treats all deposits as uniform receivables is not analyzing the account — it is assuming the conclusion.
If payroll trust fund taxes are not remitted, the IRS may assess responsible persons personally. Responsibility is not based on title — it depends on who had authority over financial decisions, who knew taxes were unpaid, and who chose to pay other creditors instead. Willfulness does not require evil intent. The corporate form does not protect against this assessment.
Merchant cash advance products are structured as purchases of future receivables. That characterization carries significant legal consequences — for enforceability, for the UCC filings that accompany it, and for the MCA company's position in a multi-creditor priority analysis. What an MCA company actually purchased is often far less than what the contract claims.
MCAs are sold at the point where patience has already left the room. Fast approval, limited documentation, money in days. The transaction is described as a purchase of future revenue rather than debt. The vocabulary lowers resistance at the exact moment the owner is looking for a reason to accept. The reality: daily ACH withdrawals begin immediately and operate regardless of actual receivables performance. The factor rate creates a fixed total repayment from the outset that does not decline like a loan balance. Once the withdrawals are running, a portion of incoming money is committed before the owner begins making decisions.
The first advance addresses a timing problem. Daily withdrawals begin. Cash tightens. The next advance restores temporary liquidity but adds another daily claim against the same revenue stream. Each advance appears to solve a short-term cash problem while reducing the cash available later. At some point the problem stops being liquidity and becomes mathematics — the amount leaving the account each day is no longer compatible with the money needed to operate honestly. Effort does not fix the math.
An MCA company acquires only the interest the business actually had available to transfer at the time of transfer. It cannot acquire trust funds. It cannot acquire payroll-tax withholdings. It cannot acquire property already consumed by superior claims. In a construction business, a single project draw may arrive carrying trust fund obligations, payroll-tax withholdings, IRS tax lien encumbrances, and prior security interests — all simultaneously. The gross deposit is not the receivable. The receivable is the residual interest, if any, remaining after those obligations are accounted for. In a stacked MCA situation, each subsequent funder may have purchased very little or nothing — depending on what senior claims already consumed the available interest before the agreement was signed.
The waterfall organizes all claims against a specific asset pool in the order in which they must be satisfied. It answers the question every creditor needs answered: what is this creditor actually entitled to receive from these assets given everything senior to it?
Before any dollar can be distributed through the waterfall, the legal character of that dollar must be determined. A deposit is not automatically a receivable. To the extent a project payment is impressed with trust obligations, the contractor possesses the money without being its beneficial owner. The withheld payroll taxes in the same deposit were never ordinary business funds. The gross deposit is not the receivable. The answer requires tracing the funds, identifying the obligations attached to them, and determining what portion was actually available for transfer to any creditor.
Settlement in a priority dispute should be priced against distributable value, not nominal claim size. The waterfall framework converts the priority dispute from a series of bilateral collection threats into a structured analysis of distributable value and distribution order. That conversion — from pressure to analysis — is where rational settlement becomes possible.
A judgment establishes that the debt exists and is enforceable. It does not establish that the debt is recoverable. The gap between those two conclusions is where the priority analysis lives.
In Texas, judgment lien priority on real property is established by the order in which abstracts of judgment are recorded in the county real property records. For personal property, priority among judgment creditors generally runs from the time of levy, not the time of judgment — a creditor with a later judgment who levies first on personal property can beat a creditor with an earlier judgment who has not yet levied. An executing creditor can force the sale of assets subject to a senior lien, but the senior lien survives unless the lienholder was properly joined and the sale extinguished the lien. Speed of execution does not create priority over senior liens.
A receivership places business assets under court-appointed control and creates significant operational disruption. Receiver fees are paid from the asset pool ahead of creditor claims. A receivership does not alter the priority of senior encumbrances. A receiver collecting assets subject to senior liens is collecting assets the junior creditor who sought the receivership may not be entitled to. The correct analytical question is not whether the debt is collectible in theory but whether there is distributable value available after satisfying senior claims.
By the time the creditor race is running, the business owner wants to know what can still be done. The answer depends on where the business is in the sequence, what value remains, and whether legal tools are available that have not yet been used.
An MCA company's ability to enforce its agreement does not determine its priority position relative to other creditors. Contract rights and collection leverage are not the same as legal priority. Defenses include: recharacterization of the agreement as a usurious loan; failure of the reconciliation provision to function as a meaningful adjustment mechanism; invalidity of a confession of judgment under applicable law; and the residual receivable argument — if the receivables were already consumed by trust obligations, tax liens, or prior perfected security interests before the MCA was executed, the funder's claim may be junior to or defeated by those prior interests regardless of what the contract says.
MCA agreements typically require disputes in a jurisdiction selected by the funder — usually far from where the business operates and its assets are located. The strategic response includes challenging forum selection clauses where applicable and using a priority determination proceeding to consolidate all creditor claims in a single Texas court. A court that can see the full creditor landscape is better positioned to impose order than a court seeing only one contract dispute at a time.
A reset is possible only if the business has something to reset to. That requires honest analysis of what value remains after senior claims, whether the business can generate revenue not immediately consumed by the creditor structure, and whether the owner's personal exposure has been mapped and addressed. The options — informal workout, refinancing, bankruptcy, controlled shutdown, or priority determination proceeding — are not equal and are not reversible. Each has a window. Delay does not improve outcomes. It reduces the number of available paths.
Plain-English definitions of key terms from The Structure of Business Financing, Second Edition and this site.
Professional Information
General Information. This website is for general informational purposes only. Nothing on this website constitutes legal advice, and viewing or using this website does not create an attorney-client relationship.
No Engagement Without Written Agreement. No attorney-client relationship is formed unless and until a written engagement agreement has been signed by both the client and Thomas A. Sesny, Jr.
Communications. Communications sent by email or by any other method do not create an attorney-client relationship, do not impose any duty to respond, and should not include confidential, privileged, or time-sensitive information unless an attorney-client relationship has been established.
Attorney Advertising. The information on this website may be considered attorney advertising. Prior results do not guarantee a similar outcome. Legal outcomes depend on the specific facts, documents, parties, law, jurisdiction, and procedural posture involved.
Jurisdiction. Legal references on this website are based primarily on Texas law and federal law as understood at the time of writing. Laws, rules, procedures, and enforcement practices vary by jurisdiction and may change over time.