BREAKING THE BANK
Why is Katie Price bankrupt and what does this mean?
Plus the difference between bankruptcy and insolvency explained
EVERYONE has heard of people being declared bankrupt, but it's not as simple as just having no money.
In 2024, it was revealed Katie Price had gone bankrupt for the SECOND time after blowing her £45M fortune,
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What is bankruptcy?
Bankruptcy is a legal status whereby debts cannot be repaid.
In the UK being bankrupt is limited to applying to individuals but in the US and some other countries, it can be applied to companies as well.
The word itself is derived from the Italian phrase banca rotta meaning "broken bank".
In the modern world, it normally involves a restructuring of debts in an attempt to rehabilitate those who owe the money and sometimes continue with their business.
In most jurisdictions, people or companies are declared bankrupt by a court order.
Is it the same as insolvency?
Bankruptcy is just one type of insolvency in the UK.
There are two legal definitions of insolvency in the UK with one being where a business or individual’s liabilities (what you owe) exceed your assets (what you own), or, where you are unable to pay your debts as they fall due.
Additionally, there are several different types of insolvency, only one of which is bankruptcy, these include:
- liquidation (applies to a limited company or partnership)
- administration (applies to a limited company or partnership)
- company voluntary arrangement (applies to limited companies)
- partnership voluntary arrangement (partnerships)
- individual voluntary arrangement (individuals who can also be made bankrupt)
- debt relief order (where an individual owes less than £15,000)
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Why is Katie Price bankrupt?
On November 26, 2019 Katie Price was declared bankrupt after failing to pay her debts.
She was supposed to be paying off £12,000 a month to her creditors after taking out an individual voluntary arrangement (IVA) 12 months ago - but has failed to do so.
The reality star managed to dodge bankruptcy in early August 2019, but was only given 12 weeks to stave off financial ruin.
Katie saw her once lucrative media empire fall apart and the collapse of her businesses.
Katie Price avoids bankruptcy but only has 12 weeks to stave off financial ruin after ‘blowing her £45m fortune’
Them in March 2024, Katie was declared bankrupt for the second time.
The hearing, held at the Rolls Building in London, heard she owes HMRC a total of £761,194.05.
Which famous people have gone bankrupt?
Several celebrities have gone bankrupt over the years.
Here are just a few of the big names who have filed over the years:
- Donald Trump has had six of his companies declared bankrupt during his years in business but has never filed personally
- Meghan Markle's dad Thomas filed for bankruptcy last year with credit card debts of £24,181
- 50 Cent filed for bankruptcy in 2015 despite once being worth an estimated £119million
- Former Westlife singer Shane Filan filed for bankruptcy in 2012 with £20.5 million of debt
- Lady Gaga was technically bankrupt during her Monster Ball tour in 2009