Celebrities Who Went Bankrupt — and What They Did Wrong

50 Cent proved to be a canny businessman, earning $300 million in just a few years thanks to more than just music (an early investment in Vitaminwater, for example, reportedly paid off big time). Eyebrows were raised when, despite an estimated net worth of a half-billion dollars, the rapper declared bankruptcy in 2015, claiming to be more than $20 million in the hole — while at the same time posting images on social media featuring him posing with stacks of $100 bills spelling out the word “broke” (his lawyers insisted the cash was actually “prop money." He was discharged in $2017, paying off $22 million in debt.

On the dubious advice of some family members, actress Kim Basinger bought an entire Georgia town — nearly 1,700 acres — paying $20 million with a plan of turning the place into a tourist attraction by building a movie studio and hosting a film festival. Those plans never came to fruition when Basinger later ran into some financial difficulties, forcing her to sell off big chunks of the place; she later admitted in an interview that “nothing good came out of it,” with the entire experience reportedly causing a rift with her family. Then came the 1993 film Boxing Helena, which Basinger agreed to do but then backed out of after realizing how creepy it was. The movie studio took her to court and won, with Basinger ordered to pay a judgement of $8.1 million. This led Basinger to file for bankruptcy; she subsequently appealed the decision to a higher court, which ruled in her favour, and she later settled with the studio for $3.8 million. This was all before she went through her nasty divorce with Alec Baldwin.

Known for a string of hits such as “Heard it Through the Grapevine” and “What’s Going On,” soul legend Marvin Gaye was forced to declare bankruptcy in 1976 after his divorce, with the settlement ultimately demanding that the cash-strapped singer pay all royalties from his next album (Here, My Dear) to his ex-wife to make up for $600,000 in unpaid alimony. Another rumoured factor in why Gaye was broke: an alleged escalating and increasingly expensive cocaine habit, which saw him burn through his earnings at an alarming rate. As a result, his final years were characterized by financial struggles and drug addiction, until he was tragically shot to death by his own father during a heated argument.

The late Larry King is now regarded as a legendary broadcaster, but his early days in the business were far from glamorous — especially that time in 1971 when he was arrested and charged with grand larceny after ripping off $5,000 from his then-business partner. Although the charges were dropped, the whole thing made him toxic to employers, and a four-year stretch without work left him with a $350,000 debt that led him to declare bankruptcy in 1978. However, later that same year he was offered a late-night radio gig in Washington, DC, which eventually morphed into his wildly successful CNN show, placing his days of financial difficulties behind him.

Late rocker Tom Petty famously declared bankruptcy in 1979, not because of any financial duress, but as a legal gambit to free himself from a restrictive contract with his record label. Petty discovered he was deeply in debt to the label due to the common music industry practice of paying artists advances against future earnings which, due to “creative” accounting, never seemed to amount to much. Meanwhile, Petty’s lawyers informed him that when he signed his original contract, he gave away 100 per cent of his publishing royalties in exchange for a $10,000 advance. Filing for bankruptcy, however, would force the court to re-adjust all of his business arrangements, including voiding his contract with the label. Fearing that other artists would follow suit with the same strategy, the label’s lawyers made it their mission to convince Petty not to declare bankruptcy. "As soon as they thought my action might set an industry precedent," Petty explained, "they rolled out the big guns." Looking back, Petty said, “It may have been a sham in some ways, the bankruptcy strategy. But ... [the label’s] lawyers figured we’d out-lawyered them.”

As one of TV’s most popular stars, child actor Gary Coleman reportedly earned a hefty $64,000 per week for playing Arnold “Wachootalkinbout, Willis?” Jackson on hit sitcom Different Strokes. After the show ended and the cute child actor became an adult, the lucrative acting roles dried up. Assuming he had millions in the bank, Coleman was shocked when he took a look at his financial statements and saw he was broke. Wondering where all the money went, he ultimately sued his adoptive parents, whom he accused of squandering his TV fortune. That protracted and expensive legal battle, coupled with his ongoing medical issues involving kidney dysfunction, combined to drain what was left in his bank account. He filed for bankruptcy in 1999, listing debts of more than $70,000. "I can spread that blame all the way around," Coleman said in an interview, "from me to accountants to my adoptive parents, to agents to lawyers and back to me again.” Coleman passed away in 2010 after suffering a fall.

R&B singer Toni Braxton was a millionaire who lost it all not just once, but twice. While Braxton sold 20 million albums, she claims she signed a bogus deal that paid her royalties of less than $2,000. After launching an unsuccessful lawsuit against her record label, she declared bankruptcy in 1998. In 2008, she abruptly cancelled her Vegas show due to health reasons, and when insurance company Lloyd’s of London refused to pay up (they claimed she didn’t divulge her pre-existing medical issues in the insurance policy), she was on the hook for all the costs related to the cancelled shows. Facing multiple lawsuits from creditors, she filed for bankruptcy for a second time in 2010. Meanwhile, it looks like Braxton may be on her way to more financial trouble, with reports in early 2019 alleging she owes more than $500,000 in back taxes.

Like Toni Braxton, comedian Sinbad has two bankruptcies under his belt. The first one, in 2009, came about from a massive tax debt. The second time, in 2013, Sinbad filed for bankruptcy due to business expenses, paying out of pocket to keep his company afloat and salaries paid, all in the hopes that he’d land a lucrative movie role that would refill his coffers. “I spent money, and I kept thinking, ‘I get one more movie and I’ll wipe these bills out,’ but that movie never came,” he told HuffPost. “That black pride, I said, ‘Man, I’m going to hang in there, I’m going to pay these bills.’ So you owe a million dollars. I can pay that. OK, fines, fees, now you owe two-and-a-half million. ‘But I didn’t do nothin’!’ Now you owe four million.” At the time of his second bankruptcy, Sinbad was reportedly in the hole for $10 million — $8 million of which resulted from unpaid taxes from the years 1998-2006.

In his heyday, the most feared boxer to ever step into the ring, Mike Tyson, earned more than $400 million during his boxing career. “Iron Mike” was also known for his extravagant lifestyle, shelling out big bucks on jewelry, mansions, sports cars, parties — even Siberian tigers he kept as pets. When he declared bankruptcy in 2003, Tyson listed debts in excess of $27 million, of which nearly $18 million came from unpaid taxes. Other debts included $600,000 in legal fees and $50K in unpaid child support.

Rocker Meat Loaf declared bankruptcy in the 1980s, not because of an extravagant lifestyle but because of a protracted legal battle involving songwriter Jim Steinman (who wrote all the tunes on his hit Bat Out of Hell album) and his record label. He explained the reasoning behind his bankruptcy in a 2003 interview with The Guardian: “They were playing games with me — I had 45 lawsuits totaling $80m thrown at me, it was a game. And the only way to stop them playing their game was to declare a chapter 11 bankruptcy,” he said. “Because every time we'd get one case dismissed, they'd throw another one at me. And everybody thinks I had all this money but I didn't, because CBS did not pay my royalties until 1997. I got paid the royalties for Bat Out of Hell 20 years later.”