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The 8 Worst Bankruptcies in History

admin — Sat, 28 Mar 2009 09:51:18 +0000

Throughout history, there have been a number of successful people who have built great fortunes. Many of these people were able to enjoy their riches, while leaving enough for future generations to enjoy. There have also been others who have earned vast amounts of money, only to be squandered away, ending in bankruptcy. Similarly, companies have been built into opulent empires that have been later reduced to rubble with a simple turn of tides. In this article are eight examples of some of the worst personal and corporate bankruptcies in history.

Historical personal bankruptcies

1. Jakob Fugger

Jakob Fugger is a 15th and 16th century merchant and banker who amassed such a fortune that he came to be known as Jacob The Rich. Throughout the Renaissance, Fugger played an important role in supporting major political and religious figures. He contributed over 540,000 (over 1,500 kilograms worth of gold) florins to help Charles V win the title of Holy Roman Emperor by paying off the electors.(1) Fugger also funded the construction of what is known today as Vatican City.(2) While Jakob was able to accrue enough riches to last for generations, many of his descendants would squander away the wealth and not much is left of it today.(3)

2. Henry Ford

Henry Ford is well-known as the founder and owner of Ford Motor Company. Many of Ford’s inventions reshaped and revolutionized the entire transportation industry and the history of America as a whole.(4) Before getting things right with the Ford Motor Company, however, Henry Ford had troubles with debt. Ford borrowed money from a few politicians and started the Detroit Automobile Company in 1899. Two years later, the company went bankrupt, almost forcing Ford himself into bankruptcy.(5) After leaving the Detroit Automobile Company, which would later develop into the Cadillac Automobile Company, Ford founded the Ford Motor Company and became one of the richest and most well-known people in the world.(4)

3. Mike Tyson

In more recent years, another sizable case of bankruptcy occurred when Michael Gerard Tyson filed for bankruptcy in 2003. Mike Tyson is one of the most popular, well-known and notorious figures in professional boxing. He fought his way to to the top of the boxing world, becoming the youngest person to win and hold the title of heavyweight champion.(6) Some of Tyson’s most lucrative boxing matches earned him over $30 million each. It is estimated that he earned between $300 million and $400 million throughout his career, but he ended up filing for bankruptcy in 2003 as a result of poor money management.

4. Charles M. Schwab

Charles Michale Schwab was a powerful and extremely rich man who helped lead a large steel corporation to success. Schwab’s career began as a stake driver in a steelworks company, which he later became the president of. He negotiated the sale of the company and became the president of the newly formed corporation known as U.S. Steel. Later on, Schwab ended up leaving the company to become the president and chairman of the board for Bethlehem Steel Corporation.(7) The company became one of the largest steel producers in the world and Schwab became extremely rich.(8) Schwab had a hankering for excessive spending on extravagant parties, gambling and extramarital affairs, which would cause his fortune to dwindle. In 1929, the stock market crash forced Schwab into bankruptcy. His fortunes were estimated at around $25 million to $40 million, which would have been equivalent to around $500 million to $800 million today.(7)

Historical corporate bankruptcies

1. Lehman Brothers

One of the most recent corporate bankruptcies, which occurred in 2008, holds the title as the largest bankruptcy case in history.(9) Lehman Brothers Holdings Inc. is a firm that offered financial and investment services worldwide.(10) Before filing for bankruptcy on September 15, 2008, the firm was worth over $600 billion in assets. Causes for the bankruptcy date back over seven years, during the 9/11 attack, but the biggest cause was the financial crisis of 2008.(11)

2. WorldCom

WorldCom Inc., known today as MCI, Inc., was forced to file for bankruptcy in 2002. The WorldCom Inc. bankruptcy stands as the second-largest bankruptcy case in the history of the United States. The company’s pre-filing assets amounted to over $100 billion.(12) The main cause for the fallout was the numerous fraud cases that the company and its executives had to face. Since declaring corporate bankruptcy bankruptcy, WorldCom Inc. has merged with MCI Communications to form MCI, Inc.(13)

3. Enron

Enron Corp. currently holds the record for the third-largest bankruptcy filing in US history.(14) The American energy company was founded in 1985, and quickly became a large tycoon worth revenues approximated at around $101 billion in 2000.(15) Enron Corp. filed for bankruptcy in 2001, with their total assets amounting to about $66 billion before filing.(14) Cases of accounting fraud and business fraud that became known as the “Enron scandal” were the main causes for the bankruptcy.(15)

4. Conseco, Inc.

Before filing for bankruptcy in late 2001, Conseco, Inc.’s assets were estimated at over $60 billion.(16) Conseco was an insurance organization that offered life insurance, supplemental health insurance, annuity and other financial products and services. The company’s debt amounted to $8 billion, forcing them to file for bankruptcy.(17) The company was not able to rebound until 2003.

These historical riches-to-rags stories can be seen as large, red, flashing warning signs of what to look out for in order to avoid bankruptcy. Sure, some bankruptcies are caused by bad and perhaps even uncontrollable circumstances, but there are a number of ways that your can safeguard yourself or your company from bankruptcy:(18)(19)

1.   Understand how personal bankruptcy and corporate bankruptcy works.
2.   Make sure to have good legal and financial advisors with great track records, especially for corporate dealings.
3.   Keep accurate and honest accounting records that will help you make accurate and honest decisions with regard to finance, legal, and bankruptcy matters.

One of the biggest lessons to be learned by these historical bankruptcies is that there can only be two bankruptcy fates: 1) stay bankrupt, or 2) earn back your fortune. Even if you fall and go bankrupt, it is not the end. With determination, hard work and clear goals anyone can rebound from a bankruptcy.

Sources:

Top 10 Celebrity Bankruptcies You Can Learn From

admin — Thu, 26 Mar 2009 10:51:17 +0000

Celebrities from around the world are often admired for their fame and their fortune. Let’s face it, practically anyone would love to live in the lap of luxury, with millions to spend on some of the world’s most extravagant and opulent treats. Whether it’s John Travolta’s Boeing 707 private jet(1), Donald Trump’s high-end real estate ventures(2), or Ryan Seacrest’s magnificent home theater(3), celebrities certainly know how to spend a pretty penny. Every now and then, however, stories of celebrities gone bankrupt come about. Whether they make it back on top or not, celebrity bankruptcies are some interesting stories to follow. Here are 10 celebrity bankruptcies that you might want to learn from on your way to making your own fortune.

Mike Tyson(4)

Michael Gerard Tyson, otherwise known as “Iron Mike” Tyson, is one of the most popular and controversial figures in boxing history. As the youngest-ever winner of a heavyweight boxing title, Mike Tyson gained fame and a fortune amounting to an estimated $300-million. In August of 2003, after being convicted of rape and getting back into the ring again, Tyson filed for bankruptcy due to uncontrolled spending and bad financial advice.

Kim Basinger(5)

Kimila Ann “Kim” Basinger was a model turned film actress who became famous for her roles in “Never Say Never Again,” “The Natural,” “L.A. Confidential,” and “Batman.” Winner of a Golden Globe Award, Academy Award, and Screen Actors Guild Award, Basinger had a promising career. In 1989, Basinger and a few other investors put up $20 million dollars to buy a small town in Georgia called Braselton. After spending such a hefty amount, she was sued for $8-million for backing-out of the film “Boxing Helena,” ultimately leading to her filing for bankruptcy.

Burt Reynolds(6)

Burton Leon “Burt” Reynolds, Jr. is an actor who has become well-known for the hundreds of film appearances that he has made throughout his ongoing career. Reynolds had to file for bankruptcy in 1996, because of his lavish expenses, a failed business venture and a divorce from Loni Anderson. He rebounded from the bankruptcy within a couple of years.

Toni Braxton(7)

Toni Mechelle Braxton has gained much of her popularity as a singer and songwriter of R&B music, as well as a few acting roles. In line with a $3.9-million debt, Braxton had to file for bankruptcy in 1998, forcing her to sell many of her posessions to pay-off creditors. After filing for bankruptcy, she was offered a Broadway role in “Beauty and the Beast”, which helped her get back on track. She soon released a chart-topping album that catapulted her back into fame and out of bankruptcy.

MC Hammer(8)

Stanley Kirk Burrell, best known by his stage name MC Hammer, became famous during the 1980s and 1990s as a rapper and dancer. In 1996, Hammer had to file for bankruptcy after acruing a debt of $13 million. His extravagant lifestyle and decreasing album sales led to the bankruptcy. Since declaring bankruptcy, Hammer has released a number of albums and, in 2008, became host and CEO of a television show.

Wayne Newton(9)

Carson Wayne Newton, also known as Mr. Las Vegas, is an actor and entertainer who has had over 30,000 solo shows in Las Vegas. Despite his success as an entertainer, Newton had to file for bankruptcy in 1992, with a debt of about $20 million. The debt was largely due to a libel case that he filed against NBC. It was not until 1999 that Newton would be able to build his fortunes once again.

Marvin Gaye(10)

Marvin Pentz Gaye, Jr. is an iconic image in the soul and R&B music who became famous during the 1960s and 1970s. In 1979, Gaye had to file for bankruptcy due to tax problems, overdue alimony payments, and drug addiction. He moved to Hawaii and, later on, to Europe. Touring Europe and later returning to the US, Gaye began to regain fame until he was shot and killed by is father.

Meat Loaf(11)

Michael Lee Aday is a musician, stage actor and screen actor who is best known by his stage name Meat Loaf. Meat Loaf has been very successful as a rock musician, but he has had to endure two major bankruptcies during the 1980s. The first bankruptcy was caused when Meat Loaf found out that his managers, Dellentash and Sonenberg, were stealing money from him. Meat Loaf changed managers and was sued for breach of contract, leading him to file for bankruptcy. The second bankruptcy happened during 1986, when Meat Loaf’s new album failed to become a hit. Since filing for the 1986 bankruptcy, Meat Loaf has been able to rebound, touring and producing new albums.

Cyndi Lauper(12)

Cynthia Ann Stephanie “Cyndi” Lauper is an actress and singer-songwriter who has won an American Grammy and an Emmy award. Before becoming successful, Lauper was in a band called Blue Angel, which released an album that didn’t do well. The band broke up and fired their manager, who later sued them for breach of contract. The $80,000 lawsuit caused Lauper to declare bankruptcy in 1980. She later went on to success and fame in the mid-1980s. Lauper has released a total of 11 albums and more than 40 singles, with her total record sales amounting to over $25 million.

Gary Coleman(13)

Gary Wayne Coleman became popular during the late 1970s up to the mid-1980s as an actor in an American sitcom named “Diff’rent Strokes.” Coleman filed for bankruptcy in 1999, due to the mismanagement of his trust funds. Since declaring bankruptcy, Coleman has made a number of appearances on television and in movies, but he has never regained the fame that he had in the 80s.

While some of these celebrity bankruptcies may be inspiring “rags-to-riches” stories, others have not ended so well. It can be difficult to maintain one’s fortune after making it, which is why it’s important to learn from these stories of bankruptcies. Most of the celebrities who have filed for bankruptcy have been forced to do so due to uncontrolled spending, lavish lifestyles, legal matters, or mishandled fortunes. It is easy to get caught up trying to make money, but it’s essential to know how to manage money once you have it, to avoid bankruptcy.

Here are some simple things you can do to avoid bankruptcy:(14)

1. Try to negotiate with your creditors for extensions on debt payments.
2. Make sure you get sound advise from financial and legal experts who have a good track record.
3. Manage your resources well and keep track of your expenses and income.

No matter what you do, always hold on to the things in life that are more meaningful than money, like family, friends, laughter, and love.