debt

Perennially smiling entrepreneur Joe Francis might not have so much to smile about now. The Girls Gone Wild Founder may owe nearly $34 million in taxes. Francis has been served with a tax lien that says that he failed to pay $17.7 million in 2001, $11.2 million in 2002 and $4.9 million in 2003. Francis told TMZ that he doesn't owe the money and that the lien is "total retaliation for me beating them in court." A couple of weeks ago a judge approved a plea deal letting Francis plead guilty to charges of filing false tax returns and bribing jail workers and sentencing him to time served and a year of probation. Francis is planning to file for personal bankruptcy.

After the jump, check out a video of Francis on the television show "Life of Luxury." It showcases his extravagant spending on yachts, homes, exotic cars, jets, and of course, entertaining beautiful young women.

Luxury brand Prada won't have to scramble for cash anytime soon. Earlier this summer the Italian fashion house sought to renegotiate some of its debt in order to have ready cash to create more stores. The lenders have agreed and now the brand has the money to invest in expansion. The terms of payment of 450 million euros of debt have been extended to 2012. Of that debt 100 millions euros would have been due last month and the rest would have matured in summer 2010. With the extension Prada's majority owners, Miuccia Prada, the label's designer and her husband and Prada chief exec Patrizio Bertelli don't have to contemplate selling off shares.

Prada has flirted with holding an initial public offering several times in the past couple of years but always backed out citing poor timing. This new loan agreement could possibly push Prada to make that move before the loan comes due in 2012. With the emerging signs that the recession might be starting to wane, Prada is also well-poised to take part in any potential shopping upswing.

We've written before about Annie Leibovitz's financial woes but as Gawker reports, now her lender, Art Capital Group, is taking her to court. Leibovitz borrowed $24 million from the financial firm and as collateral the company took not only her two homes and all her negatives and the copyright to her photographs but also an agreement to sell her archives to repay the loan and the rights to arrange the sale. Art Capital has sued breach of contract saying that she isn't letting real estate agents into her homes and is being difficult in order to block attempts to sell the photos. The suit says that the loan was offered on the assumption that Leibovitz would eventually have to sell her photos to pay back the loan when it comes due in September. As part of the agreement that Leibovitz signed, Art Capital has the rights to administer sales of the work.

At Capital has physical custody of the negatives but the company is after a bigger prize, the intellectual property rights to Leibovitz's portfolio. In order to broker that sort of sale they need Leibovitz's cooperation. Meanwhile, Leibovitz made an agreement with Getty Images in March to work under a "a special multi-assignment collaboration." This deal, done without Art Capital's knowledge, cut them out of getting commission on the photos. The suit doesn't mention any payments that Leibovitz has made to Art Capital against the loan but it is unlikely that she has paid much of it off and as the Gawker article mentions Leibovitz's only out may be to declare bankruptcy. One of Gawker's commenters also makes the point that with the magazine business shrinking and the budget for lavish photo shoots on the wane, Leibovitz's opportunities to make money may be diminished.

Art Capital is in the business of making money off art and sometimes, artists. The company issues loans of $500,000 or more at interest rates from six percent to 16 percent to those who have artwork worthy of making such a loan. It operates like a pawn shop; if you fail to pay and you lose your precious art. Case in point, a Rubens hanging in the Art Capital offices once belonged to Veronica Hearst, the widow of Randolph Apperson Hearst. She mortgaged her art to hold onto Villa Venezio in Manalapan, Florida. She eventually lost the home in foreclosure. Artist Julian Schnabel sued Art Capital this year. He took out an $8 million loan in 2006, when he was building his pink folly known as Palazzo Chupi. Schnabel claims he paid back the loan but Art Capital says it is entitled to more money because Schnabel did not reveal there was an existing mortgage on the property. An ArtInfo article on that suit quotes Gerald Peters, a Santa Fe-based dealer who has bought paintings from Art Capital and says that "the game they have to play is rough, but the service they are providing is real. And there's demand for it."

It seems that turmoil has hit most of the major fashion houses recently. A recession isn't pretty. The Financial Times is reporting that Prada has asked banks to ease terms on debt. The Italian fashion house is hoping to renegotiate some of its debt in order to have ready cash to create more stores. The company had a net debt of around 1 billion euros at the end of last year.

The FT says that talks are underway to convince Italian banks UniCredit and Intesa Sanpaolo to reschedule the repayment of 350 million euros that matures in summer 2010. The debt in question is owed by a holding company, which is 95 percent owned by Miuccia Prada, the label's designer and her husband and Prada chief exec Patrizio Bertelli. They have stated they are not interested in bringing in outside investors at this point both because the situation isn't dire and also because any potential valuation of the company now might later have a negative impact on the Prada IPO. Prada has flirted with holding an initial public offering several times in the past couple of years but always backed out citing poor timing.

The banks are considering putting off repayment for a year or two. At a time like this banks can't afford to have their debtors in trouble and it would seem a wiser course to help Prada ride out the recession and then collect the money in brighter times.

An article in the London Times has celebrity chef Gordon Ramsay finally speaking out on his financial troubles. Ramsay, never one to mince words, called the news that his accountants wanted to put his business into administration and that he owed more than £7 million "the worst bollocking ever." In January auditors from KPMG found that Gordon Ramsay Holdings was losing millions and they wanted to take control of Ramsay's restaurant empire.

Ramsay admits now that he expanded too quickly opening 10 restaurants in 10 months last year. At the height of the crisis he considered selling up to 20% of the company and his £6 million London home. He did end up selling his Ferrari and managed to right the company by firing some staff, selling some restaurants and he and his business partner Chris Hutcheson, his father-in-law put £5 million of their own money into the business. Ramsay is hoping that KPMG will give his company a clean bill of health, finally putting an end to what he terms "the worst year of my life." Sounds like a true kitchen nightmare.

Ramsay wasn't the only British celebrity chef to have a bad year. Antony Worrall Thompson's company AWT Restaurants Ltd. went into administration in February 2009. Last fall Tom Aikens one of London's handsome and temperamental Michelin starred chefs ran into trouble when he could not pay his suppliers. Ramsay seems to have avoided their fate for now and perhaps his recent humbling will help shift his focus from the fame and back to the food.

Last month we learned that Courtney Love was facing money woes but now American Express is in on the action. Love owes a total of $352,059.67 in unpaid charges and fees on her Amex Gold, Centurion and Platinum Cards and a lawsuit has been filed in U.S. District Court in Los Angeles.

Love has claimed that she has lost more than $30 million at the hands of her money handlers and that as much as $500 million worth of real estate was bought and sold using Cobain's, Love's and their daughter's Social Security numbers. At the time of the announcement last month, Love's lawyer described her as "pretty frugal." According to TMZ, most of the money, $279,079.68 was spent using her Centurion card. Love's lawyer says that Love did not rack up six figures on her credit cards and that these are fraudulent charges.

While many musicians love their jewelry some can forget to pay for it. Last month I wrote about Wyclef Jean facing a lawsuit over unpaid-for jewels, this week it's Lil Wayne. The rapper whose real name is Dwayne Michael Carter Jr. has been ordered by a Miami-Dade Circuit Court judge to pay a New Orleans jeweler $146,000 for a diamond ring and necklace. Lil Wayne had made arrangements with jeweler Jack Sutton to pay for the pieces in monthly installments in 2006. Sutton took Carter to court because Carter had made only one $24,000 payment over the last two years.

Carter may return the $138,000 ring instead of paying in cash. The Miami Herald also reports that according to a May 6 notice of federal tax lien filed with Miami-Dade County, Carter owes nearly a million dollars ($977,840.81) to the IRS in income tax.

It seems that we have a disconnect between luxury goods and luxury living. Anne Metz, from Styledash, noted that a study by Jane Magazine found that women 20-29 spend almost 50% of their disposable income on luxury fashion items, including handbags, clothing, cosmetics and jewelry. Carlos Lamadrid, vice president and publisher of Jane, pointed out that many of these women are "children of the affluent baby boomers" and grew up expecting and appreciating luxury goods. 84% said that they had no problem with living beyond their budgets.

We hate to be the ones to break it to Mr. Lamadrid, but an appreciation of quality and style isn't worth all that much if you are living so far beyond your means that all of your "good taste" gets repossessed when you can't pay off your debt.

Michael Jackson, struggling to pay off the approximately $300 million that he owes to the New York hedge fund, Fortress Investment Group, has announced that he has reached a deal with the group. Though the exact details were not released, a part of the deal has Jackson selling half of his shares in the Sony/ATV music library - 25% of the total collection - to Sony. After the sale, Sony will own 75% of the library. Jackson's portion, which he purchased in 1985, is currently valued at half a billion dollars and includes the rights to 251 Beatles songs as well as music by Bob Dylan, Joni Mitchell and Stevie Nicks.

Now here's a way to reduce public debt. Reuters reports that Japan's Ministry of Finance will auction off gold coins from its collection online next February. Nearly 2,500 coins will be sold on a Yahoo Japan Corp. site from February 3-19. The Ministry of Finance has around 32,683 modern gold coins and plans to sell them off by March 2008. An auction of 1,037 coins in October brought in around $4.83 million for the public coffers. The money goes to the government's general account budget and though it is a drop in the bucket it sell helps bring down Japan's looming mountain of debt.