Michael Jackson`s Neverland Bankruptcy
Watching the helicopter footage of an ambulance crew arriving, crowds of curious onlookers gathering and the World’s media clamouring for the best vantage point, it was all too easy to think of this as some kind of clandestine peek into Michael Jackson’s home at his most vulnerable. Jacko seems all the more vulnerable when we consider that the Beverly Hills mansion, in which he lived out his last moments, wasn’t actually his home. Jackson had been living a self imposed exile from his famous residence, the Neverland Ranch, for many years. The pressure of spiralling debt and its association with child molestation court cases had, understandably, taken the sparkle off his fairytale refuge.
Michael Jackson bought the property in 1987, at an estimated cost of $20 million. Jackson would transform the working ranch into a shrine to his lost childhood. He spent a colossal $35 million on home improvements. Admittedly, not your average home improvements though. The King of Pop set about the mammoth task of furnishing a kingdom befitting his status. This included the laying of two railway lines, a pair of heli-pads, a working zoo, a private amusement park and it’s very own fire brigade. Neverland’s annual running costs were in excess of $10 million.
Jackson had about $25 million in debts secured against Neverland. The situation reached critical in 2007 when, at $23m in arrears, repossession procedures began. California law states that if you miss three mortgage payments, you’re given a final 90 days. Having not released an album since 2001, Jacko failed to make this payment. In the UK, we would hopefully be able to come to an agreement with the lender about a more reasonable repayment period. There would also be time to try and sell the property. Hopefully, this would let you pay off the debt, free up some equity and allow you to move on, albeit to more frugal surroundings.
Otherwise, bankruptcy would seem like the only other option. There is always that threat of losing your home in order to pay off the outstanding debts. For most people, it would be a far better option to try and sell up, rather than let yourself get to the stage of repossession or foreclosure. Thankfully for Michael, his overwhelming celebrity went a long way in guarding against repossession. Another loan company were happy for him to transfer the outstanding debt to them, in a truly exceptional variation of debt consolidation.
Of course, the same extraordinary circumstances that saved Neverland just served as a stay of execution for Jackson. One of the downsides to living in Neverland, similar to the Peter Pan world it’s named after, is a refusal to face grown-up responsibilities. Although the zoo and a few of his other amusement were auctioned off, he just turned his back on Neverland due to the painful association with financial difficulty. I’m sure, had he spoken to one of the debt advice specialists, such as here at Harrington Brooks, they would have advised him to how best to deal with his debts.