When celebrities are best known for their roles in bankruptcy court, it's a sure sign that they've made some major financial missteps.
Robin Leach might consider reviving his career with a new twist on his old reality show. Ratings would go through any Spanish-tiered roof for Lifestyles of the No Longer Rich and Famous. Who doesn't love to hear about celebrities who squander their millions?
When fortune begets misfortune
Big names like Kim Basinger, MC Hammer, Burt Reynolds, Debbie Reynolds, and Toni Braxton have all had their day in bankruptcy court. At the height of their fame, these stars were living the high life-seemingly with little concern for what would happen if the money stopped flowing. Certainly their accomplishments allowed for some leeway in discretionary spending, but it's tough to comprehend how someone who's making millions can end up owing millions. Here's a little taste of how it happened:
- Kim Basinger partnered with the Ameritech Pension Fund to buy Braselton, Georgia (the whole town) for $20 million. She then dropped out of a movie deal, and was subsequently sued for breach of contract. She doesn't have Georgia on her mind any more.
- MC Hammer bought a $30 million mansion, and strapped himself down with a staff that cost him $500,000 per month. Hammer's flash-in-the-pan fame left him with $13.7 million in debt, and only $9.6 million in assets. Talk about getting hammered!
- Burt Reynolds once owned luxurious homes in two states, a dinner theatre, a jet, and a helicopter. He also reportedly invested a lot of money in a restaurant chain that flopped. When Reynolds declared bankruptcy in the 1990s, he was in debt to the tune of $11 million.
- Debbie Reynolds-no relation-spent $3 million to buy a Vegas casino, which later racked up debts in excess of $10 million. Both the casino and Reynolds personally had to file for bankruptcy protection.
- Toni Braxton's bankruptcy case, like Basinger's, was complicated by issues surrounding a contract that she viewed as unfavorable. Even so, the living expenses she reported to the bankruptcy court totaled nearly $50,000 per month. Roughly $23,000 of this was labeled as business expenditures, supposedly required in her line of work. One report claims Braxton squandered $2.5 million on makeup, hair, clothing, personal appearances, and other indulgences. When Braxton faced the bankruptcy judge, she owed about $4 million.
Other famous debtors, including Gary Coleman, Peter Frampton, and Ted Nugent, blamed their woes on mismanaged finances. Coleman had the additional burden of expenses relating to a lifelong medical condition. Then there's Willie Nelson, who followed bad tax advice and ended up owing the IRS some $30 million. (No wonder he's on the road again.)
The future will bring more tales of the No Longer Rich and Famous. No amount of money is enough to overcome irresponsible decision-making in the areas of personal spending, investment vehicles, and tax shelters. Being a star doesn't mean that you can have astronomically high ongoing expenses. If it does, you could wind up in a meteoric freefall, and end up crashing in bankruptcy court.