Generally, there are many connotations that come to mind when one hears the word “bankruptcy”. A few are: the person does not know how to manage his/her finances and is generally irresponsible; the person is trying to “game” the system. On the other hand, as is the case with the vast majority of filings, there are legitimate business, personal (job loss, divorce, having co-signed for a former friend) or medical issues which lead to the filing. The truth is that very few people enter into the filing process without a great deal of dread.
There are many famous people who have filed for bankruptcy. Some who have filed are Walt Disney, Donald Trump, Marvin Gaye, Mike Tyson, Meat Loaf, Cyndi Lauper and now 50 (pronounced fiddy) Cent. 50 Cent has filed earlier this month for chapter 11 bankruptcy protections to reorganize his assets. Chapter 11 is a type of filing usually used by corporations to restructure a business in the face of debt.
Interestingly, David Cassidy, the Partridge Family actor filed for chapter 11 bankruptcy about five months ago. His finances are in such a state that his Ft. Lauterdale home is scheduled for bankruptcy auction in September. In 2014, Cassidy and his wife Sue Shifrin Cassidy, broke up after 23 years of marriage. Shortly after this, Shifrin Cassidy filed to be considered as a creditor of Cassidy because he reportedly has monthly expenses of $27,000 and an income of $12,500 a month. However, this is not the first time he lost his home. Cassidy fought a two year battle with his mortgage company claiming predatory lending after he stopped making payments on a condo. His lawyer said Cassidy settled to protect his image and avoid the “stigma of foreclosure.”
Many of the celebrities mentioned above have millions or even billions in assets and debt. A Chapter 11 is typically used to reorganize a business, which may be a corporation, sole proprietorship, or partnership. A corporation exists separate and apart from its owners, the stockholders. The chapter 11 bankruptcy case of a corporation (corporation as debtor) does not put the personal assets of the stockholders at risk other than the value of their investment in the company’s stock. www.uscourts.gov, 11 U.S.C. §§ 301, 303.
If you feel that you are in financial trouble you should seek the advice of a bankruptcy attorney. Attorney William Schroeder has represented individuals and business entities in chapter 11 bankruptcy filing. If you want to find out whether you or your company is a good candidate for chapter 11 bankruptcy filing, call us at: 215-272-7050.
The following are biographies on famous Americans according to “Totalbankruptcy.com” .
Disney formed his first animation company, Laugh-O-Gram Studio, in 1920, with the intention of making animated fairy tales. Laugh-O-Gram found a financial backer in New York, and Disney began building up his staff of animators. The studio even had a mouse infestation, as legend has it, including one mouse with enough personality that it earned a nickname–Mickey. However, the backing firm went broke, and Disney was no longer able to pay his employees or his debts. The company filed bankruptcy, and Disney struggled to make enough money to buy a bus ticket to Hollywood, where Disney made a fresh start with his new production company, named after himself, and his new animated character.
Milton S. Hershey
The name is synonymous with chocolate, but Hershey’s path to success was more bitter than sweet. Born in Pennsylvania in 1857, Hershey started his first caramel business in Philadelphia at age 19. It failed, as did another company he started in New York City. Twice bankrupt, Hershey took what he knew about caramel and applied it to chocolate. Hershey finally found the right recipe for success in 1900, and established a factory and town in his name.
The 16th President had a tough life before seeking the nation’s highest office. Lincoln failed in business, love and politics before his career finally took off. In 1833, Lincoln and a business partner purchased a general store, which sold goods that the pair bought from other stores on credit. The plan didn’t work out. The store was failing, so Lincoln sold his shares in the company. However, when his former partner died, the store’s creditors came after Lincoln, who was forced to file bankruptcy.
In 1893, Henry Ford was the chief engineer at the Edison Illuminating Company. Within nine years, Ford had built his first automobile, named the Quadricycle, and started the Detroit Automobile Company. A gifted engineer, Ford focused heavily on the mechanics of his auto, and completely ignored the idea of marketing his invention. Ford’s first product failed to capture the public’s attention, and Ford was forced to leave his company and file bankruptcy. One year later, Ford started the Ford Motor Company and designed a car that broke the land-speed record. In 1908, Ford released the Model-T to an eagerly awaiting public, and changed the face of American industry.