Over the last six weeks I’ve written twice about famous people who have filed bankruptcy - some at the height of their fame, some prior to becoming famous, and some after they had experienced fame and fortune. These blogs have been popular - many people visiting our website have viewed them. I think the reason these blogs have drawn interest is that the feeling of isolation that people with financial difficulty face is very real, and knowing that other people - successful people - have faced financial difficulty helps the “average” person understand that money problems happen to many people, at all stages of life, and money problems don’t only happen to average people. This week, let’s look at a few more of the well-known people who have filed bankruptcy to straighten-out their finances.
50 Cent
Curtis James Jackson III is much better known as the rapper 50 Cent. In the early years of the 21st Century, there were few hip hop artists better known or more successful than 50. In the early 2000's, 50 earned a Grammy and 13 Billboard Music awards for his music - a number exceeded only by Jay-Z among hip hop artists. After being signed to a major music label, 50 expanded his business, branching out from his music career to include a number of other investments and business start-ups, including Vitaminwater, a brand that was eventually sold to Coca-Cola. The sale reportedly made 50 Cent $100 million. But in the last half of the first decade of the century, 50 Cent’s commercial appeal declined. However, he did not reduce his cost of living, even though he wasn’t generating as much income as he had previously. And 50 Cent, who grew up in very modest surroundings, financially supported many of his family and some of his friends.
50 Cent also got into financial hot water when he posted a sex tape of a rival rappers ex-girlfriend. 50 Cent ended up spending $5 million to settle the lawsuit that resulted from that episode. He then lost $2 million on a headphone design, and to add financial insult to injury, was had a $17 million civil judgment entered against him from the headphone designer on the basis that 50 Cent had attempted to steal the headphone design. By 2015, while 50 Cent had $15 million left in assets, he owed $20 million. He filed a bankruptcy case. All of us make poor financial decisions, and some of us make serious personal mistakes that put us on the wrong side of a civil lawsuit. For people in these situations, a bankruptcy filing gives them a chance for a fresh financial start.
Michael Vick
Michael Vick enjoyed a stellar college football career, playing quarterback for Virginia Tech. After his college career was over, Vick was selected by the Atlanta Falcons as the top pick in the 2001 NFL draft. Vick made the playoffs twice in his career with the Falcons, and was named to three Pro Bowls. While Vick was very successful athletically, he made several bad financial decisions. First, when he was being paid millions to play football, Vick spent lavishly, and helped support about 30 relatives and friends financially. Second, Vick helped run an interstate dog-fighting ring, engaging in illegal activity. For this, he was charged and convicted of a crime and ended up being sentenced to prison. While he didn’t lose money in dog-fighting, the conviction resulted in his release from the Falcons (and the Falcons “clawed back” about $7 million of a $37 million signing bonus) and the notorious nature of the dog-fighting case ended his ability to receive income from endorsements and personal appearances. Third, his first sports agent sued him for $45 million, and case that involved months of expensive litigation and that ultimately led Vick to pay $4.5 million in a settlement. These events exhausted Vick financially and in 2008 Vick filed a bankruptcy case to discharge his financial obligations.Like 50 Cent, Michael Vick over-extended his financial commitments to friends and relatives. A lot of us do that when a relative or close friend asks for a loan to resolve their own financial issues. And, unfortunately, some of us involve ourselves in activities that end up in investigations and administrative (and is some cases, criminal) proceedings. Even if the legal problems themselves aren’t traced to money-losing activities, resolving the legal problems can be extremely expensive and can result in lost time that could be better used to generate income. In these cases, filing a bankruptcy case can be a useful tool to establish equilibrium financially.
Walt Disney
Walt Disney is one of the most influential people in the history of movie-making, with his innovative animation techniques and the scores of memorable characters he created. Beginning in the late 1920's, and continuing until his death in 1966, Disney founded, guided and directed the fortunes of his Disney company, which proved to be spectacularly successful, not just with his animated films, but also live action movies and his Disneyland and Disney World theme parks, which in themselves are multi-million dollar sources of revenue.
But before Disney became famous, he suffered financial setbacks with the first studio he started, Laugh-O-Gram. That animation venture was never successful, despite Disney borrowing money heavily to bring his dream to reality. So in 1921, Disney filed bankruptcy to discharge his personal obligation to Laugh-O-Gram’s creditors. Undaunted, Disney kept working on his business, and in 1928 created the iconic character of Mickey Mouse. From that point on, Disney was very successful in his field.
