February 17, 2011
By: Brenna Lemieux
Actor Gary Busey has filed for Chapter 7 bankruptcy protection , reports Reuters. It seems the iconic actor has debts between $500,000 and $1 million, backed by assets of $50,000 or less.
Among the creditors listed in Busey’s bankruptcy petition are lawyers, the IRS, Wells Fargo, UCLA Medical Center, and L.A. County Waterworks Districts. Sources also note that a woman named Carla Loeffler, whom Busey allegedly accosted at an airport in Tulsa, may be listed among his creditors.
While financial distress among the famous is not in itself surprising, what demands notice in this case is Busey’s publicist’s spin on the matter. According to sources, a statement released about Busey’s Chapter 7 filing identified the actor as a "great American institution," comparing him to General Motors and American Airlines — other "icons" that have also filed for bankruptcy as part of a larger strategic plan for eliminating debt and starting over.
While this comparison may be primarily amusing in its attempt to paint Busey’s financial troubles in a noble light, it also highlights some basic misunderstandings about the differences between Chapter 7 bankruptcy for individuals and Chapter 11 bankruptcy for corporations.
Gary Busey’s Chapter 7 bankruptcy should allow him to completely eliminate eligible unsecured debts; however, before the court eliminates those debts, it may liquidate some of Busey’s assets in order to repay his creditors. Any non-exempt assets he may have could be auctioned off by the court to raise enough money to repay creditors.
The Chapter 11 bankruptcies highlighted by the statement regarding Busey’s filing, however, focus more on streamlining business operations, renegotiating contracts, and otherwise modifying business strategies as part of a large plan to repay debts and stop incurring new debts.
While the bankruptcies of both GM and American Airlines can be argued to be part of a larger "strategy" (the news was chockfull of speculation about both bankruptcies for months before the respective companies filed), Busey’s seems to be a necessity he came to after years of accumulating debt.
This is not to say, of course, that individual bankruptcy filings cannot be construed as financially savvy or strategic moves; rather, the analysis is meant only to highlight the bizarre comparison between Busey and the other "American Institutions" with which he allegedly has so much in common.