Financial Writer Declares Bankruptcy
We have managed numerous financial trusts for clients, especially managing monies for someone after the settlement of a Massachusetts motor vehicle accident or other personal injury in Massachusetts. In keeping abreast of the law, and in researching and writing a Massachusetts consumer and bankruptcy blog, we have read numerous books and scholarly papers on personal finance, managing retirement accounts, for complex and general investments.
One author who stands out is Robert Kiyosaki, whose “Rich Dad, Poor Dad” series can be helpful for focusing on how to be the rich dad, as opposed to being the poor dad. His books are far from scholarly. They essentially say things like “Start your own business,” or invest in local real estate and learn to have your investments pay you dividends, rather than living off of a paycheck. Not greatly admired in the serious financial world, or among financial publishing. Nevertheless, Kiyosaki has amassed a publishing empire since the 1997 book came out.
The empire originally included Rich Global, LLC, a company that filed for bankruptcy protection recently. The issue seems to be a failure to pay a federal court ordered judgment of $24 million to Learning Annex. According to news stories, there is no obligation by rich dad himself, Robet Kiyosaki, to pay any of the obligations.
Apparently, Mr. Kiyosaki now also runs Rich Dad Co., which was not under the same contract as Rich Global, LLC. Media sources say he owns perhaps another ten companies, mostly associated with publishing and personal finance. Further, there are only a few million dollars in the Rich Global company while his fortune is estimated at over $80 million.
How can this be a lesson to people considering a Massachusetts bankruptcy? First, don’t believe the neighbor’s dad, or the guy who wrote the book about success, just because of their flashy ideas.
More importantly, looking at what little information we have, Mr. Kiyosaki will clearly get the better of the contract, notwithstanding a significant federal court judgment against him. And not only because of bankruptcy protection. This is because his contract with Learning Annex, an early supporter, apparently neglected to include Mr. Kiyosaki personally responsible for any and all debts or judgments. Thus, when Mr. Kiyosaki violated the terms of the contract and lost in court, Learning Annex could only collect against the company. With $80 million at home, but only a few million in the now bankrupt company, the rich dad is clearly doing well in this deal.
Filing for bankruptcy in Massachusetts is not hard. But it does require a critical understanding of what contracts you have signed and what the ramifications for signing them is. Generally, our Boston bankruptcy clients, are not subject to million dollar judgments. But the frequently are subject to judgments for failure to pay on credit cards in Massachusetts, motor vehicle repossessions in Massachusetts, and other contractual obligations that could not be met.
Bankruptcy is an excellent vehicle, for the rich dad Kiyosaki, and perhaps for you, if you can personally discharge the obligations and debts you have in Massachusetts.