When Michael Jackson passed away on June 25, 2009, he left behind a staggering financial mess, with court documents revealing that the King of Pop was over $500 million in debt. This revelation came to light through filings made last week in Los Angeles, shedding new light on the financial turmoil that plagued Jackson in his final years.
Jackson, who died at the age of 50, was in the midst of preparing for his highly anticipated “This Is It” residency at the O2 Arena in London. The series of concerts was scheduled to run from July 2009 to March 2010 and was seen as a potential financial lifeline for the beleaguered star. However, his untimely death shifted the financial burden onto his estate.
According to the court documents, Jackson’s most significant assets were encumbered by more than $500 million in debt and creditors’ claims. Some of this debt was accruing interest at exorbitant rates, and some had already defaulted. Certified public accountant William R. Ackerman, who testified as a defense witness for AEG Live in a wrongful-death trial in August 2013, provided a detailed account of Jackson’s financial habits. Ackerman revealed that Jackson’s spending far outpaced his income, with expenditures on charity donations, gifts, travel, art, furniture, and jewelry. “He was tapped out,” Ackerman stated.
The financial liability for Jackson’s planned London tour fell on his estate after his death. He owed approximately $40 million to concert promoter AEG, and there was little hope of generating income from his already heavily leveraged assets. Estate executors claimed in a March 2024 filing that the estate was on the brink of bankruptcy when Jackson died.
Despite the dire financial situation at the time of his death, the estate has since made a remarkable turnaround. The estate is now valued at over $2 billion, thanks to strategic renegotiations of debt and asset sales. Jackson had more than half a dozen lawsuits pending worldwide, and over 65 creditors’ claims were filed against the estate, leading to additional litigation. Attorneys for the executors managed 15 lawsuits in the U.S. and assisted with more in Europe and Japan, most of which were resolved favorably.
The executors were able to renegotiate and restructure financing arrangements that existed at the time of Jackson’s death, significantly reducing interest rates. This enabled the estate to avoid losing any assets to lenders and ultimately satisfy the encumbrances that existed at the time of his death. The renegotiations included the debt secured by Jackson’s catalog Mijac Music, which was more than $70 million at the time of his death, the estate’s interest in Sony/ATV, and the mortgage on his Hayvenhurst estate and Lindley Avenue condominium.
Although the executors have eliminated the estate’s debt, resolved virtually all creditors’ claims and litigation, and solidified the MJJ business as a significant entity in the music industry, they continue to face challenging business, tax, and legal issues. The filing also notes a pending final decision on a victory in a 2021 court battle with the IRS.
In addition to the financial turnaround, the estate has seen significant gains from various ventures. In 2012, the estate purchased a stake in EMI Publishing and the rights to Motown classics and songs by Carole King and Norah Jones for $50,000, later selling them to Sony for $300 million in 2018. More recently, the 2022 Tony-winning Broadway show “MJ the Musical” and an upcoming Michael Jackson biopic directed by Antoine Fuqua have added to the estate’s financial successes.
However, the estate continues to face legal challenges. Last year, a California court of appeals revived a lawsuit from Wade Robson and James Safechuck, who allege that Jackson sexually abused them for years when they were boys. The allegations were detailed in the 2019 documentary “Leaving Neverland.” The pair have been granted a trial jury against Jackson’s estate and corporations, MJJ Productions Inc. and MJJ Ventures Inc. An attorney for the estate has denied the allegations, expressing confidence in Jackson’s innocence.
Despite the controversies and financial struggles, Michael Jackson’s legacy as a music icon remains intact. His estate’s remarkable financial recovery is a testament to the efforts of the executors and their ability to navigate the complex web of debt and litigation that Jackson left behind.
Source: Los Angeles Times, Entertainment Weekly, People, Deadline
