Limiting Debt and Maximizing Business: Why Form a Loan-Out Company?

By: Tifanie Jodeh, Esq. & Kelmer Messina

When we think of the word “company” we usually imagine huge buildings with thousands of employees running operations that amount to millions of dollars. While this can be one, a company can potentially be formed by one person and even be run from home.

Companies can come in many shapes and forms but, ultimately, a company is a legal entity created with the purpose of conducting business and limiting liability (such as debts and mortgages). A company is a different legal person from its members, meaning their assets and obligations are different from your personally. 

In the case of the Entertainment Industry, it has become customary for actors, producers, directors or any other Industry professional to loan out their creative services through what we call a “loan-out” company because of its many advantages. 

In this article we will examine 3 benefits of going through the work of incorporating a company, even if you do not run a huge operation with little or no employees. These 3 benefits are:

• #1: Forming a company can limit your personal liability. When contracting through a company, the obligations and debts you incur during the course of business become separate from your personal finances. 

• #2: Organization. Having your personal and business matters separate from one another will make it a lot easier for you to do business. This clear separation can benefit you during dealmaking and also makes it a lot easier for money to go to the right place. Payments and liabilities are directed from your Company to partners, employees or independent contractors

• #3: Legitimacy. When working with others in the Entertainment Industry or securing financing, it can give an air of legitimacy and professionalism, ultimately making it easier for them to do business with you. Longevity of your business will make it better for you to secure loans, create good will and build your brand

We can assist you with forming the appropriate corporate entity. It is worth the time to explore your options and find out if it’s the right fit for you and your goals. 

If you have questions concerning this topic, or other areas of entertainment, business or corporate law, please email us at Asst@entlawpartners.com or call us at 310-684-3666 to schedule a free initial consultation. . 

COPYRIGHT; DISCLAIMER: Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs. 

Entertainment Law Partners is a full-service Los Angeles and Miami area based entertainment, business and corporate transactional law firm providing expert counsel in a wide array of business transactions with a focus on corporate, business, entertainment, media and technology industries. 

You are receiving this newsletter because we most likely met you somewhere at an entertainment related function such as a film festival, event, party, networking or we've done business with you. 

For more information about the firm or to stay up -to-date on current issues in the business, visit our site at Entertainment Law Partners or follow us on Facebook, LinkedIn, Instagram or Twitter (@entlawpartners).

Will My Contract Survive this Pandemic?

COVID-19 and Force Majeure Clauses: Will My Contract Survive the Pandemic?

By: Tifanie Jodeh, Esq. 

Kelmer Messina

  When any of us in the entertainment industry first heard about the ongoing Corona Virus pandemic we could have never imagined that its spread would have such enormous repercussions around the world, and, even less, imagined its impact could be felt in such a short time. 
  Now that productions have ceased, artists, producers, and crew either deciding or being forced to stop working, what can you do to protect your rights? Well, the secret to do that might just lie on an often overlooked element of contract drafting: the force majeure clause. 
  In principle, termination and force majeure clauses have similar purposes: they both excuse the performance of one or more parties’ responsibilities to a contract. Yet, despite this similarity they are distinguished from each other because of one crucial difference: invoking a termination clause is generally a result of the actions of one parties while, under force majeure clauses, a party is excused because performance has become impossible or unreasonably difficulty due to events beyond the control of the parties. This implies that an intervening cause, such as the CoronaVirus Pandemic, could potentially excuse parties from performing under a contract. 
  Nonetheless, while the invocation of force majeure is a possibility you should have in mind, it might not be applicable in every situation arising under this pandemic. 
  Call us to review your agreements as it will be easier for us to help you make a determination of the circumstances in lieu of having to spend thousands of dollars in court to assert your position over any allegations of breach. 
  While certain events make explicit mention of superseding events such as “acts of God”, war, or strikes in the force majeure clauses in entertainment contracts, a great majority of them fail to mention anything like the word “pandemics” or “public health crises”. We need to answer this question: will COVID-19 be a valid excuse for people to invoke force majeure? 
  We need to look at some clauses that might terminate the contract immediately, while some others might just suspend it for a given time. Others might even require a party to unilaterally determine if force majeure is applicable or not. Whatever the case, make sure that, just like any other provision, the force majeure clause is applicable to your needs. 
  Keep in mind, even if COVID-19 has impaired the execution of certain contracts, the force majeure clause will only excuse people from performing their obligations if the impossibility arises as either a direct result of the disease. This means that just because the force majeure clause has been carefully delineated and is invoked during this difficult time, it would not automatically be valid because it is invoked now. Put simply, a writer or editor stuck at home because of COVID-19 is more than likely to be able and expected to keep working unless he is directly affected by circumstances such as contracting the disease or accessing the tools or resources he needs has become unreasonably difficult or impossible.  
  In conclusion, be prepared. Let us examine your clause and try to distinguish any ulterior motives the other party might have and assert your rights appropriately. After all, this is a difficult time, but if you confide in Entertainment Law Partners’ industry experience, we promise you that we will make it so you can be as informed as possible. 
  If you have questions concerning this topic, or other areas of entertainment, business or corporate law, please email us at Asst@entlawpartners.com. 

COPYRIGHT & DISCLAIMER Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs.  You may contact her at Asst@entlawpartners.com.

Tifanie Jodeh grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice.

DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.