Nevadan at Work: Bankruptcy lawyer aims to save assets

Zachariah Larson had his first "only in Las Vegas" experience as a law clerk in 1999 when he got to sit with then-Mayor Oscar Goodman at an American Bar Association luncheon.

"That would not happen in any other city in the country. This is a pretty cool town," the bankruptcy attorney for Marquis Aurbach Coffing said at the law firm's Summerlin office.

Larson returned to Las Vegas in 2001 upon graduation from Pepperdine University law school in Malibu, Calif., and went to work for Goldsmith & Guymon.

"I was tired of Colorado and couldn't stand L.A. It was beautiful, but I hated it," said Larson, who grew up in Colorado and completed his undergraduate studies at Colorado State University.

"For me, Vegas has been the ability in a very short time frame to get the experience you'd get in a lifetime somewhere else," he said. "Here, you get the opportunity to work with families that built this town. If I was in L.A., I'd never be hanging out with a developer who built the town. That goes to a senior who has 30 or 40 years with the firm."

Larson said he specializes in business and personal bankruptcies because he's always been good with finances and understanding balance sheets. He almost double-majored in economics.

He founded his own firm in 2004 and merged with Marquis Aurbach Coffing in January.

When he's not trying to figure out how to save someone's assets, Larson spends time off-roading with his three sons in his modified Land Rover Discovery. The stocky 36-year-old played rugby in high school and college, and enjoys watching the Denver Broncos.

Question: What are the common bankruptcy filings?

Answer: The two most popular filings are Chapter 7 and Chapter 13 for individuals. Chapter 7 is a form of liquidation where basically the party liquidates all their assets that aren't protected by state and federal law, and they hit a reset button to get out of their debts. Chapter 13 is a planned payment for that individual based upon their income where they pay off a portion of their debts over three to five years.

For businesses, Chapter 7 is for liquidation just like for individuals except it's the death of a business. There is no discharge of debts paid for by businesses. Basically, it's a beneficial killing of the business. It just puts it away in a nice little box, and even the debts don't go away. The (Chapter) 11 is the reorganization of the business, which gives the business the opportunity to rework its leases, perhaps rework its mortgages and work with its vendors to be more profitable in the future.

Question: How much does it cost to file?

Answer: Individuals can be as low as $2,800, whereas a company can be as high as $200,000.

Question: What are the repercussions?

Answer: For an individual, the repercussions are relatively small. Your credit score is going to take a hit. There's no doubt about it. It does fix very rapidly. Most of my clients experience ... from the initial hit, they usually run into the low 600s to the high 700s for their credit score within two years of filing.

Question: How many bankruptcies would you estimate you've filed during this recession, say over the last four years?

Answer: Honestly, it's been hundreds, if not thousands. I just don't know.

Question: Are the numbers increasing, or have we seen bottom?

Answer: In my opinion, the numbers, the actual volume of physical, individual filings have gone way down. I believe it's something like 30 (percent) or 40 percent from last year. However, in my particular business, the pipeline is very large because we are now seeing all the business owners being impacted versus all the employees.

Question: How important it is to reorganize early instead of waiting until your personal assets have been depleted?

Answer: That's most important. If you wait, you lose. If you don't wait, there are legal ways to protect what you do have, and the state of Nevada is very good at allowing you to keep a lot of your stuff.

Question: How are bankruptcies affecting the local economy?

Answer: Both good and bad. For individuals, they can be very good because it gives them an avenue to get out of debt, to get out from underneath their debt and to over. The key is planning to make sure it's done correctly. For businesses, it can be either very good or very bad. If a business waits too long to reorganize, generally speaking, they lack the capital or other sources they could have had in the early stages of planning to effectuate a plan of reorganization which would lead to the bad part of the economy. Because if you wait too long, the company has to die, you have to leave a bunch of employees behind, you're generally leaving the retail or commercial space you're renting, and there is a business dead. It's very difficult to start back over again if it has to die.

Question: Any particular business sectors experiencing financial hardships?

Answer: Here in Clark County, I would say it's across the board. Any business that's related to construction has certainly had a very difficult time. That includes everyone from general contractors to every single type of subcontractor you can think of. Whether it's framers, underground work guys, any of the companies related to the construction industry ... plumbing, electrical, anything in that regard has had a very difficult time.

Retail outlets or commercial outlets are having a difficult time because it's a luxury. People have cut way back, so it's difficult for those guys to survive when the people aren't spending their discretionary income. You can also see that overflow into bars and restaurants. They're having a more difficult time because they don't have the customer base that they once had.

Question: There are signs of economic growth nationally and locally. Can companies teetering on the edge be saved by the "rising tide lifts all ships" concept?

Answer: It's difficult to do depending on what industry you're in, and it really gets back to cash flow. If your business is able to generate it, then you can survive. If there's no cash flow or nothing in the pipeline like for a lot of my contractors, then you won't survive. That's the sad part of my job because you can have a successful business for over 30 years, and if you have no cash flow, you're going to have to close your doors.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.