IE Business Daily Business news for the Inland Empire.
Welcome to another episode of the “Professionals of the Inland Empire” podcast hosted by John Tulac. Today’s featured guests are two business attorneys, Margeaux Mernick and David Goodrich.
Margeaux Mernick, a business and corporate attorney at Mernick Law has more than 20 years of experience in closely held businesses. Her areas of expertise include business formation, general counsel work, succession planning, buy-sell agreements, and acquisition sales. Her past roles have included positions at Getty (an art-based institution), the City of Thousand Oaks, and a boutique law firm in Calabasas, where she focused on general counsel work for the last 10-12 years. She attended Pepperdine University, where her interests included land use and environmental law. Mernick emphasizes the importance of maintaining health and fitness for productivity and views work-life balance as essential for effective legal work.
During the discussion on business formation, Mernick highlights a common misconception that forming an LLC is the default choice. She notes that the entity structure should be based on future financing plans, where often a C corporation is preferred for attracting private equity. She warns that online services can provide oversimplified recommendations. Key factors to consider when selecting a business structure include tax implications, liability issues, and the formalities associated with different types of entities, necessitating the need for a cooperative team including CPAs and banks. Important documents like the founder’s agreement, shareholder’s agreement, and operating agreement are crucial in preventing disputes and providing clear expectations among stakeholders.
David Goodrich is a bankruptcy attorney with 26 years of experience in bankruptcy law and is a legal specialist certified by the state of California. He is a partner at Golden Goodrich in Orange County and began his career at a mid-sized firm dealing with banks before launching his own law firm in 2007. He also serves as a U.S. bankruptcy trustee in the LA division of the U.S. bankruptcy court and handles about 60 to 80 cases per month. David represents medium to large-sized businesses in Chapter 11 bankruptcies, occasionally filing Chapter 7 bankruptcies depending on the situation.
Goodrich addresses common misconceptions regarding bankruptcy, such as the perception that bankruptcy means company closure; he clarifies that 90% of cases can involve financial restructuring. He stresses the importance of organizing corporate documents and financial records to prevent bankruptcy and discusses the importance of timing when consulting with a lawyer for planning and exploring alternative solutions. Common scenarios leading to bankruptcy include imminent bank levies, foreclosures, cash flow issues, and emergencies like unpaid payroll. The decision between Chapter 11 and Chapter 7 must be made based on circumstances, with Chapter 11 allowing for reorganization while Chapter 7 entails liquidation of unprotected assets.
Goodrich emphasizes the significance of legal capitalization in business startups, mentioning that undercapitalized companies are more prone to debt guarantees leading to personal liability, which may complicate bankruptcy filings.
The PIE podcast aims to showcase Inland Empire professional talent, foster local economic development, and highlight the Provisors networking community. Catch the full show on YouTube @ProfessionalsofInlandEmpire.
