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5 Famous People Who’ve Filed for Bankruptcy

Posted by in Bankruptcy
4
Sep 2013

Bankruptcy ServicesOver the past 5 years, bankruptcy has become more common amongst Canadian households.  The global economic crisis has forced many people into joblessness, foreclosures and bad investments — a series of unfortunate events that can quickly trigger bankruptcy.  Although it may seem unfathomable to come out alive, declaring bankruptcy isn’t necessarily the kiss of death.  And it even happens to the best of us …

Business magnates and celebrities alike have found themselves in the bankruptcy pool.  Just because you’re famous, doesn’t mean you’re immune to bad investments and excessive spending habits.

Below are 5 famous people who’ve filed for bankruptcy and survived to tell about it!

Burt Reynolds

It looks like that stellar smile and signature moustache weren’t enough to keep Burt Reynolds out of financial trouble.  The star of ‘Smokey and the Bandit’ lived a lavish lifestyle, probably assuming that his career would never take a turn south.  Mansions, helicopters and a luxurious Florida ranch are just some of the things Reynolds blew his money on.

But his excessive spending habits, coupled with some bad career moves, put him in financial stress.  And his very expensive divorce to Loni Anderson didn’t help the situation either.  By 1996, Reynolds owed $10 million to his creditors.  Soon after, he declared Chapter 11 bankruptcy from which he emerged nearly two years later.

Meanwhile, there was lots of controversy surrounding The Bandit’s bankruptcy filing.  Reynolds got to keep his Florida estate under a homestead exemption clause.  This ticked off many observers who felt the actor was taking advantage of bankruptcy laws.  They didn’t think holding on to a $2.5 million home while writing off $8 million in bad debt was a show of good character.  In fact, many believe that the backlash following Reynold’s bankruptcy was what triggered the U.S. Senate to close legal loopholes in 2001.

Walt Disney

Sure, the Little Mermaid and Aladdin have raked in billions for the Walt Disney franchise.  But Walt was just a poor, struggling filmmaker when he first started out.  In 1922, he started his first film company called Laugh-O-Gram with one of his business partners.  The two men bought a used camera and made short films and cartoons.  Things looked like they were going well, especially when Disney signed a deal with a New York firm to distribute the films he was producing.  But it turns out that the distributor was cheating Disney’s company.

With very little cash, Disney couldn’t even cover the most basic costs to run his studio.  In 1923, Laugh-O-Gram went bankrupt.  But a reversal of fortunes was to come for the young movie-maker.  After the bankruptcy, he moved to Hollywood.  And following a series of successful creations, Disney unveiled a new character named Mickey Mouse in 1928.  And as they say, the rest is history.

Henry Ford

If anyone would understand the current peril of the Big Three motor companies, it would have to be Henry Ford himself.  At one point, a young Ford experienced financial hardship and struggled to put his company back on firm footing.

In 1899, the aspiring engineer started the Detroit Automobile Company.  He had the backing of three very prominent politicians.  But he still didn’t have the technique and innovation that would one day make him rich.  Over the next two years, his company produced just 20 cars.  His perfectionist attitude over the vehicles’ designs were often blamed for his downfall.  In 1901, the plant went bankrupt and was repurposed as the Henry Ford Company later that year.  Ford left the enterprise entirely and started the Ford Motor Company two years later.

On a side note, Ford isn’t the only automobile bigwig to know a thing or two about bankruptcy.  His rival, General Motors founder William Crapo Durant also took a financial blow during the Great Depression.  He filed for bankruptcy when his $120 million empire collapsed.  Durant spent his last remaining years not living the lavish life.  He managed a bowling alley in Flint, Michigan until his death in 1947.

MC Hammer

The 90s were all about cash, flash and glamour.  And if anyone knows a thing or two about all that, it would have to be MC Hammer.  ‘2 Legit 2 Quit’ and ‘U Can’t Touch This’ are just some of the hits that drove fans wild.  His stellar rapping skills (and parachute pants!) raked in millions.  But those millions mean nothing when you’ve got a massive entourage that needs to get paid.

Rumour has it he paid out more than $500,000 per month to his staff of 300 people.  In 1996, he had racked up nearly $14 million in debt.  This debt included $110,000 to his decorator and about $100,000 to the IRS.  In 1996, he was forced to file for bankruptcy in a California court.

MC Hammer has since became an ordained minister and is involved with Christian initiatives that help spread the gospel around the world.

Mike Tyson

You’d think a heavyweight boxing champion would be able to “fight” his way out of financial hardship.  But Mike Tyson’s fierce attitude in the ring didn’t translate so well in the real world.  A rape conviction, a stint in jail, followed by the whole ear-biting debacle catapulted the boxing star into a ring of bad press.  And as if this wasn’t enough, Tyson was drowning in massive debt and blowing his money on the good life.  He eventually filed for bankruptcy in 2003, despite an estimated career income of $300 million.

Tyson’s pricey (and very public) divorce from Robin Givens didn’t make things any better.  During the legal proceedings, he blamed his ex-wife for spending all his money on mansions and luxury cars.  He also blamed bad investment advice and embezzlement as other reasons for his financial downfall.

After a seemingly lavish run in and out of the ring, Tyson’s estimated net worth today is just under $5 million.

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