Rich Dad, Poor Dad, Bankrupt Dad
Robert Kiyosaki, author of the book, "Rich Dad, Poor Dad" filed for corporate bankruptcy for one of his companies, Rich Global LLC. Kiyosaki’s best selling book was the first in a profitable line of self-help financial books including "Retire Young, Retire Rich," and "Midas Touch," co-authored with real estate mogul Donald Trump (who has previously filed corporate bankruptcies).
Rich Global, LLC’s largest creditor is Learning Annex, which received a $23.7 million judgment in New York. The basis of the lawsuit was that Rich Global, LLC failed to pay Learning Annex a percentage of profits from Kiyosaki’s speaking engagements.
Kiyosaki’s company filed for Chapter 7 bankruptcy protection on August 20 in a Wyoming bankruptcy court. In a Chapter 7 business bankruptcy, no debts are discharged. The company ceases to do business, and business assets are liquidated by the bankruptcy trustee to pay creditors. An LLC (Limited Liability Company) shields the personal assets of the individual owners. Consequently, Kiyosaki will pay nothing from his personal wealth, but Rich Global, LLC will lose all of its assets, reportedly a $1.8 million dollars.
A Chapter 7 business bankruptcy is the last option for a company. Chapter 11 is a business reorganization that will restructure debt and provide a company time to repay its debts. However, sometimes the amount of debt is too great for the business to repay, and Chapter 7 can liquidate the business assets in an orderly fashion. Chapter 7 cannot wipe out personal liability for business debts, and there is no “co-debtor stay” to prevent a creditor from collecting from a personal guarantor.
If your business is weighed down by crushing debt, speak to an experienced attorney and discuss bankruptcy options for your business. In many cases a company can reorganize under Chapter 11 and continue its business while under the protection and supervision of the federal court.