MICHAEL Jackson died at the age of 50 last week. The world will miss his rare and tremendous musical talent. The immediate cause of death was cardiac arrest. But I believe his debts killed him. He had $400 million of debt! Not even the King of Pop can handle that kind of debt. The human body is not built to handle that kind of debt. In the eighties, he bought the catalog of Beatle songs for $48 million and his "Neverland" house in Santa Barbara for $15 million. It is estimated that his ownership of his own and the Beatle songs is currently worth $ 1 billion. But despite making hundreds of millions during his career as the most successful pop musician of all time, Michael Jackson owes between $400 to $500 million of debt.
His lavish lifestyle is one reason for the mountain of debt. He is known to have spent millions on shopping sprees for toys and antiques and weeklong parties in hotels in Las Vegas. In 2005, his accountant testified that Michael spent between $20 to $30 million more his annual income. Do the math. In 10 years, he would have to borrow $300 million to finance the deficit. With all his income and assets, Michael could not make the mortgage payments on his "Neverland" house, which had a mortgage of $23 million. His house was set for foreclosure late last year and was rescued at the last minute by an investor. He was able to finance his lavish lifestyle in the last decade by refinancing his assets for $200 million. The child molestation cases which started in 1993 and ended in his acquittal in 2005 caused him to incur more debt to pay for his legal fees.
Faced with at least $400 million of debt, even the great Michael Jackson had to return to work at the age of 50. At 10% annual interest, Michael would have to produce $40 million to pay the interest portion of the debt. In 3 years, he would have to produce $120 million to pay interest, and at the end of 36 months, after paying $120 million of interest to his creditors, he would still owe the very same $400 million. His creditors owned him. So, one of his creditors, arranged for Michael to perform in 50 concerts in England to start next week. Although tickets for all concerts were sold out in a matter of minutes, it is said that Michael would make $1 million from each concert. If this is net profit for him, all the money that he makes from the first 40 concerts would just pay interest to his creditors if he owed $400 million, but if he actually owed $500 million, all the money he makes in all 50 concerts would just pay interest for 12 months! Just imagine the stress all this creates on Michael. He is turning 51, but despite all the money he made, he owes half a billion dollars, and he has to start working again. If his concerts succeed, he will have to do at least 50 concerts a year just to pay interest to keep his debt current. To make sure his first concert next week is a big hit, he has to keep on rehearsing to make sure everything is perfect. He has to take painkillers to enable him to keep on practicing even though his body can no longer continue. So, his heart gives up. Frankly, I think his debts killed him, because nobody can pay off half a billion dollars of debt, not even Michael Jackson.
Michael should have followed the path of GM and Chrysler and sought bankruptcy protection to get rid of his debts. Chrysler emerged from bankruptcy in 45 days. Michael only owes half a billion dollars. If Michael chose bankruptcy he might have been able to block off a lot of stress caused by too much debt, and concentrate on making what he did best, making music for the world.
If you need debt relief, contact my office. I will analyze your case personally.
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Lawrence Bautista Yang specializes in bankruptcy, business, real estate and civil litigation and has successfully represented more than five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S. Fremont Ave., Bldg. A-1 Suite 1125 Unit 58, Alhambra, CA 91803.
( Published on July 1, 2009 in Asian Journal Los Angeles p. B2 )
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