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Mike Tyson Bankruptcy

February 11, 2012 by staff 

Mike Tyson Bankruptcy, For the former heavyweight champion Mike Tyson, a cash machine to himself and to others, record earnings in the boxing ring became a license to spend — on jewelry, mansions, cars, limousines, cellphones, parties, clothing, motorcycles and Siberian tigers. Despite making about $400 million over the past 20 years, Tyson managed to squander his fortune.

One of his most recent extravagances came on Dec. 22, when Tyson walked into a Las Vegas jewelry store and picked up a $173,706 gold chain lined with 80 carats in diamonds. But he never paid for the fabulous jewelry, which is among the $23 million in debts specified in the Chapter 11 petitions he filed Friday with the United States Bankruptcy Court in Manhattan.

Tyson’s free-spending past made him creditworthy at Jewelers Inc., which he departed without paying a cent for the diamonds. ”Knowing him for so long, I gave him the merchandise and knew he’d pay later,” Mordechai Yerushalmi, the store’s owner, said by telephone yesterday. ”He had open credit with me.” He added: ”He’s been through his ups and downs. He will make good on it.”

That may not be easy. At 37, Tyson’s boxing skills are diminishing, and so is his earning power; he could once command $30 million for a night’s work. His future earnings and the future proceeds from the sale of a Connecticut mansion will go to pay a $9 million divorce settlement to his ex-wife, Monica Turner. She also has a lien on Tyson’s Las Vegas estate, which is beside Wayne Newton’s.

And now, much as he ardently hammered at his opponents’ jaws, Tyson’s creditors will pursue his assets. According to Tyson’s bankruptcy filing, his foes include:

*The Internal Revenue Service, which is owed $13.4 million, and the British tax authorities, which are owed $4 million.

*The treasuries of Georgia and Michigan, which are owed $317,201 by Tyson’s company, Mike Tyson Enterprises.

*Seven law firms, which are owed more than $600,000 by Tyson and his company.

*Barry Hankerson, a financial manager, who is owed $500,000.

*The music producer Jimmy Henchmen, who is owed $450,000.

*A former trainer, Stacey McKinley, who has sued Tyson in a Memphis court to repay a debt of $800,000.

”We had some negotiations, but they didn’t go anywhere,” McKinley’s lawyer, Henry Shelton III, said from Memphis. ”Now, under the bankruptcy act, the lawsuit is stayed.”

Tyson also owes $51,949 in child support to Kimberley Scarborough, who gave birth to their daughter in 1991. ”She’s getting along with difficulty,” Raoul Felder, her lawyer, said. ”It’s of concern when you see someone who made $300 million.” Felder said he recently dropped a paternity suit against Tyson filed by another woman, who is still listed as a creditor in the Tyson filings.

Tyson’s assets — ranging from $10 million to $50 million, the filing says — include cars, two Las Vegas homes, where he said he no longer lives, and other property.

Tyson’s filing says his debt totals more than $27 million.

Debra Grassgreen, one of the bankruptcy lawyers, would not specify his assets. By telephone from San Francisco, she said: ”There could be a substantial difference between debts and assets; they could be the same or assets could exceed liabilities. It’s difficult to tell at this stage.”

Under federal bankruptcy law, a person may seek protection under Chapter 11 when unable to meet payments on his debts. The court may cancel or reschedule them, and the debtor ordinarily must present a plan within six months.

Tyson’s many creditors probably did not know what he admits in the filings.

”I have been in financial distress since 1998,” Tyson said in an affidavit, ”when I was burdened with substantial debt to Showtime, taxing authorities and parties to litigation. Since that time, although my fight income, various asset sales and litigation recoveries have enabled me to pay a lot of my debt, I am still unable to pay my bills.”

Sanford Ain, Turner’s divorce lawyer, described Tyson’s spending habits with understatement. ”He spent enormous amounts of money that were inappropriate at best,” Ain said. ”Part of it can be attributed to a lack of willpower. Part of it can be attributed to people who he let get close to him and depended on his goodwill and took advantage of him.”

Yet he added that Turner is ”sorry for what he’s going through and is trying to be as supportive as she can.”

Shelly Finkel, Tyson’s manager, declined to comment on the bankruptcy filing.

Tyson spent with the type of aggressiveness that once characterized his early round knockouts. According to court documents filed in the divorce case, he spent $400,000 a month to maintain his lifestyle. From 1995 to 1997, he spent $9 million in legal fees, $230,000 on pagers and cellphones, $410,000 on a birthday party. In June 2002, he owed $8,100 to care for his tigers and $65,000 for limos.

One of his corporate creditors is CLS-Limo Services, which he owes $308,749.

Boxers have all too frequently been known for the money they have lost to unscrupulous promoters and managers, not for the well-engineered fortune of a George Foreman, who remade himself as a jolly Everyman in his second boxing go-round, which yielded numerous endorsements, a broadcasting career and a $137.5 million deal for Salton Inc. to use his name and image to sell grillers.

Tyson’s ferocious image and criminal record, including a rape conviction, have kept advertisers from associating with him.

If financial salvation for Tyson exists, it is not in a rematch with Lennox Lewis, a third go-round with Evander Holyfield, or a fight against Roy Jones Jr. It rests with Tyson’s $100 million lawsuit against his former promoter, Don King, alleging that King duped him into signing a contract while he was still in prison for rape and siphoning off millions of dollars.

Tyson’s bankruptcy lawyers describe the lawsuit as a ”litigation asset,” which means a favorable judgment could pay off many of his debts, if not all of them. Grassgreen would not assess his chances in court against King.

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