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Wednesday, July 24, 2013

Celebrity Bankruptcies

Yesterday we provided a basic primer on personal bankruptcy-- the different kinds (Chapter 7 vs 13, etc..) and in very general terms, what to expect if you're in a position where ultimately you have to file.

Today's post will be covering some famous celebrity bankruptcies.

Many famous people over the years have had to file-- more than you'd think actually-- and the point of this exercise isn't to evoke scorn nor sympathy for their former financial plight..

Its more to show that filing for bankruptcy isn't the 'boogeyman' some would like to make it out to be..
If you think of it as a figurative 'tunnel', then like all tunnels, there's light at the end of it..  And its important you do not feel shame or embarrassment if you are one thinking of, or in process of clearing debts.

The vast majority of normal everyday people don't get to that stage because they took weekly vacations to the Caribbean or the south of France while draping themselves in white diamonds and filling their bellies with beluga caviar...

For most people, its really not their fault..

Sometimes all it takes to find oneself in serious financial difficulty is to be physically ill at the wrong time or have a child who sustained injury while not having proper insurance...

Those medical bills add up quick..

Now in the case of celebrities, you are certainly more likely to see their financial doom come from extravagance and a lack of serious, thoughtful financial planning..

Here are some examples over the last 10 years or so...
Gary Busey

In February, 2012 Busey had to file for Chapter 7 bankruptcy...

His total assets after a 25+ year movie career added up to less than $50,000 while his liabilities added up at minimum $500,000...  This included debts owed to various lawyers, the IRS, Wells Fargo bank, Santa Monica UCLA Medical Center, and a storage company

Back in Dec, 1988 Busey suffered serious head injuries when he was thrown off his motorcycle while not wearing a helmet..
~ Busey, early 1980s pre-accident

We are guessing he did not carry proper medical insurance to cover such serious injuries and this event was a big contributor in Busey running out of money as well as seeing his acting roles dry up..

That and substance abuse problems...

Sherman Hemsley
Hemsley passed away a year ago today (July 24th).. He was 74

But a decade or so prior in 1999 he was forced to file for Chapter 13 saying he lacked sufficient funds to pay back a $1 million loan from a Las Vegas investment corporation, as well taxes owed to the IRS.

Actually the 'why' Hemsley would borrow the money is interesting and if you think about it, quite sad..

Hemsley decided in the mid 1980's after a decade starring as iconic bigot George Jefferson on “The Jeffersons” that it was time to take a shot at big screen stardom.
So not only did he star in and croon the theme song to the 1987 comedy 'Ghost Fever', he also funded the film out of his own pocket..

Never heard of it?  Must be why it bankrupted him...

Shot in 1985, Ghost Fever floundered for two whole years before finally being unceremoniously dumped into a handful of theaters and later onto home video.

~ Movie Tagline: "A Contagious Comedy for the Whole Family!"

Its director was so unhappy with the finished film he insisted on an “Alan Smithee” credit. This is done when a director doesn't want his name attached to a shit project and hurt his chances at future work, so that fictitious name is applied..

Sherman Hemsley lost the $3 million he personally invested, beginning his decade long road to financial ruin that ended with him declaring bankruptcy in 1999.
Kim Basinger

In 1989, the Beautiful actress and former model was persuaded by family members to buy a small town in Georgia called Braselton (30 miles away from Athens, Ga. where Basinger was born) for $20 million, in partnership with the Ameritech Pension Fund.

The idea was to turn the town into a tourist attraction featuring movie studios and a film festival..

Unfortunately Basinger found herself being sued for breach of contract after withdrawing from a terrible and disturbed film called Boxing Helena.
Unable to pay the resulting $8.1 million in damages, she filed for bankruptcy in 1993 and two years later sold her stake in Braselton to Ameritech.  A higher court overturned the judgment against her, and she settled with the studio for $3.8 million.

Basinger’s fortunes soon turned around, however.  In 1997, she attained the pinnacle of Hollywood artistic recognition, winning an Academy Award for her performance as a Veronica Lake-lookalike call girl in 'L.A. Confidential.'
Wayne Newton

Even 'Mr. Las Vegas' had to file for bankruptcy...

In 1992, Newton filed for Chapter 11, despite having been a working entertainer since high school. (His first television appearance was at age 19, on The Jackie Gleason Show.)

Newton was forced into bankruptcy because of approximately $20 million of debts he incurred in the early 1980s while suing NBC for libel for reporting that organized crime was involved in his purchase of a hotel casino.
Originally Newton had won a libel award of $22.8 million in 1986 which would have been enough to pay his legal fees but a  year later a judge reduced the award amount to $5.3 million

To make matters worse, three years later in 1990 another judge overturned the entirety of the reduced libel award so that Newton walked away after 10 years of legal battles with Zero won.

By 1999, Newton was back in the black, but his financial issues continued when in 2005, the IRS sued him for more than $1.8 million in back taxes and penalties.
In 2009, officials at a Michigan airport claimed that Newton owed more than $60,000 in unpaid storage fees after abandoning a plane there more than three years previously. Newton later had the plane disassembled and shipped to his Vegas estate, Casa de Shenandoah, where he kept it in the yard.

And you thought Wayne's biggest problem was keeping his pearly white chompers all nice and sparkly...
Mike Tyson

The former undisputed heavyweight champ's financial woes have been well documented..

In 2003, Tyson filed for Chapter 11 after having received and then squandered nearly $400 million in ring earnings.

Tyson spent extravagantly on mansions, Bentley cars, jewelry, and even pet Bengal tigers while buying gifts for his lavish entourage..
So if you're wondering why there was the scene in 'The Hangover' where the group steals one of Tyson's tigers which Iron Mike has to later go and retrieve, it was based on Tyson's love and purchasing of the animal to himself and others..

According to the NY Times, one example of Tyson's many extravagances was that in 2002, "he walked into a Las Vegas jewelry store and picked up a $173,706 gold chain lined with 80 carats in diamonds. But he never paid for the fabulous jewelry, which is among the $23 million in debts specified in the Chapter 11 petitions"
~ Tyson having a 'bite' with Charlie Sheen.. pun pun pun..

Just something about the profession of boxing...  Joe Louis, Riddick Bowe, Ali, Evander Holyfield, Tyson...

Seems there's no quicker way to go from the penthouse to the poorhouse..

Barring any financial news deemed more important to cover, we will resume this topic of 'Celebrity Bankruptcies' with our next post...