Background
Marc Kulick manages a portfolio of 34 multifamily residential properties in Oklahoma, Arkansas, and Kansas, held through a tiered structure of single-purpose LLCs. Beginning in October 2024, Kulick—by his own description “desperate” for short-term capital—turned to YSA Investments 1, LLC, a special-purpose lending vehicle controlled by Efraim Diveroli. Over the following months YSA extended six loans totaling $4.775 million. When Kulick returned in February 2025 seeking $1.5 million—nearly twice any prior loan—YSA demanded expanded collateral. Kulick himself proposed a joinder committing “any asset controlled by any affiliate” of his to the loan obligations, and he delivered to YSA a schedule of all 34 properties as required by the guaranty. The resulting February 2025 Loan carried an interest rate of 133.333% per annum, compounded monthly.
Kulick subsequently defaulted on four loans: the February 2025 Loan, an April 2025 Loan (1,500% per annum, compounded monthly), a July 15 Loan (960% per annum, compounded daily), and a July 31 Loan (7,000% per annum, compounded daily). By the time of trial, the accrued balance under all four defaulted loans stood at $932,149,606.85—with the July 31 Loan alone generating approximately $921 million in claimed interest. In October 2025, after Kulick declined to convey deeds-in-lieu of foreclosure, YSA exercised rights under the power-of-attorney provisions in the loan documents and recorded second mortgages against at least 25 of the properties.
Kulick filed suit in the Court of Chancery seeking to void the second mortgages and enjoin further recordings, arguing (1) the collateral identified in the loan agreements was limited to LLC membership interests, not the underlying real estate, and (2) the loan terms were predatory, usurious, and against public policy. The court denied a preliminary mandatory injunction for lack of a developed record, ordered a $22.3 million injunction bond that Kulick could not post—causing the temporary restraining order to dissolve—and set the matter for a full trial, which was held on March 5, 2026.
The Court’s Holding
Chancellor McCormick entered judgment for YSA on both issues. On the collateral question, the court held that even if the agreements identified LLC membership interests as the primary collateral, the power-of-attorney provisions in both the February CPSA and the February Guaranty expressly authorized YSA to “take whatever steps that it deems necessary in its sole discretion to secure and protect its interests, including but not limited to taking any action against any of the Collateral or any real or personal property owned by the Collateral.” That language was broad enough to encompass the recording of second mortgages directly against the Title Owners’ properties, particularly given that Kulick had furnished YSA a complete schedule of those properties under the guaranty’s own disclosure obligation.
On the usury and public-policy defenses, the court rejected Kulick’s challenge on a threshold legal ground: Delaware’s usury protections do not extend to limited liability companies. Because the borrowers on the defaulted loans were LLC entities—not natural persons—the statutory and common-law usury defenses Kulick invoked were simply unavailable. The court noted, as an additional reason to reject the defense, that Kulick had personally proposed each of the interest rates by reverse-engineering a target repayment figure, acknowledged at trial that he was “not playing the victim,” and admitted he returned repeatedly to YSA because he was “desperate.” A party cannot seek equity to unwind terms he himself designed and agreed to.
Key Takeaways
- Delaware does not extend usury protections to LLC borrowers; a multi-family real estate operator who proposed triple- and quadruple-digit annualized interest rates cannot void those obligations after default on public-policy grounds.
- A broadly drafted power-of-attorney clause in a commercial loan agreement can authorize the lender to record mortgages directly against underlying real property, even where the pledged collateral is described as LLC membership interests, if the clause reaches “real or personal property owned by the Collateral.”
- A borrower-proposed joinder committing “any asset controlled by any affiliate” to loan obligations will be enforced as written; courts will hold sophisticated parties to the plain language of deal terms they drafted.
- Failure to post a court-ordered injunction bond causes a temporary restraining order to dissolve by operation of law under Court of Chancery Rule 65(c), leaving the borrower without interim protection while litigation proceeds.
Why It Matters
This decision is a sharp reminder that the usury shield does not follow a deal simply because the underlying assets are residential real estate. Lenders and borrowers alike should note that Delaware treats LLC entities as sophisticated commercial actors unprotected by consumer-oriented usury limits, regardless of how the proceeds are ultimately deployed. For attorneys structuring bridge or hard-money loans secured by real estate held in LLC form, the case confirms that Delaware law will enforce agreed-upon rates—even rates that compound to nine-figure liabilities—without a public-policy escape hatch for the borrower.
The opinion also highlights the enforcement power of broadly worded power-of-attorney provisions in commercial loan documents. Where a lender’s counsel negotiates language authorizing action against “real or personal property owned by the Collateral,” a court applying Delaware law may read that provision to permit direct lien enforcement against underlying real estate even when the nominal collateral consists of equity interests. Borrowers negotiating such provisions should treat them as granting mortgage-equivalent remedies and seek explicit carve-outs if direct-property action is not intended.