Michael Jackson close to bankruptcy with debts of $70m

Andrew Buncombe
Friday 13 February 2004 01:00

The man from Neverland is living on the never-never. Michael Jackson's financial advisers disclosed yesterday that the singer is all but broke and unable to repay a $70m (£37m) loan that is due next Tuesday. Though the beleaguered singer - who is facing child molestation charges - is virtually insolvent, he is continuing to rack up extensive debts. He regularly has million-dollar spending sprees and he is renting a $70,000-a-month home in Beverly Hills while his 2,700-acre Neverland ranch remains empty.

Al Malnik, a Miami entrepreneur who is reportedly helping Mr Jackson repair his finances, said that he was trying to have the loan with the Bank of America extended while fighting off claims from other creditors. "[We are] working towards a positive resolution of Michael's financial affairs and business affairs that will result in a reorganisation of his valuable assets," he said.

The New York Times reported yesterday that the sexual assault charges and allegations that the black separatist group, Nation of Islam, has taken a role in Mr Jackson's affairs had scared off banks and others who might have been prepared to help him.

At least two groups of investors who were prepared to make business deals with Mr Jackson last year have backed away from them because of the criminal charges, the newspaper said. At the same time other sources of income that might have helped Mr Jackson, such as new records or concert tours, are not possible while his fate is uncertain. The loan with the Bank of America was guaranteed using the singer's musical catalogue, which includes around 250 songs written by the Beatles.

Mr Malnik, a millionaire who in 1993 was alleged to have links with organised crime - a claim that he denied - said that he was helping Mr Jackson purely out of friendship. But consumer groups have criticised Mr Malnik - the owner of a national chain of loan stores - for charging his customers exorbitant rates.

Mr Malnik and Charles Koppelman, one of Mr Jackson's business managers, said they hoped to extend the due date of the Bank of America loan to December 2005 with the backing of a hedge fund in New York. If Mr Jackson were to default in 2005, the hedge fund would take over the music catalogue.

Some of the singer's advisers said that Mr Jackson appeared untroubled by the perilous state of his finances, running up bills of $2m a month on trips to buy new cars and other items.

Mr Jackson's lawyers are due to return to court today to set a date for a preliminary hearing to consider the nine molestation charges.Mr Jackson has pleaded not guilty to the allegations, which are said to involve a 13-year-old boy.

Another former celebrity who has seen his fortune disappear is also facing insolvency. The boxer Mike Tyson, 37, is said to be down to his last $5,500, according to bankruptcy papers filed in New York. His manager said that he could be forced to make a return to the ring to try to pay his debts.

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