Michael Jackson's debt figure surfaced in new court documents pertaining to the late pop star's estate.
Michael Jackson's business affairs were in such "disarray" when he died in 2009 that he was more than $500 million in debt, according to a petition filed by the late pop singer's executors to his estate.
That monumental figure has come to light in new court documents obtained by ET and filed on June 21 in Los Angeles County Superior Court. The filing is part of a petition to allow payment to compensate the executors' attorneys and the reimbursement of costs for the period of July 1, 2018 to Dec. 31, 2018.
The court documents lay out the "extraordinarily challenging circumstances" the "Thriller" singer's executors faced when Michael died on June 25, 2009 after going into cardiac arrest at his home in Los Angeles. The executors claim that, among other issues, "Michael Jackson's most significant assets were subject to more than $500 million of debt and creditors' claims, with some of the debt accruing interest at extremely high interest rates, and some debt in default."
The executors claim Michael "had additionally incurred considerable expense in connection with preparations for his concert tour, 'This is It'" and, as a result, "his untimely death -- virtually on the eve of that concert tour -- left his Estate with financial liability approximating $40 million to the concert promoter, AEG, and little hope of generating income from his already highly leveraged assets."
Complicating matters, the executors claim "Michael Jackson or one or more of his entities was the named defendant in a number of lawsuits in several states, including California, and several foreign countries" and that "more than 65 creditors' claims were filed in the Estate spawning additional lawsuits."
The executors behind Michael's estate claim that his "business affairs were in disarray" at the time of his death because, among other issues, "Michael Jackson had changed business managers, lawyers, and personal managers several times in the years immediately prior to his death, most recently in the weeks and months prior to his death, and the transfer of files to his last team of advisors and representatives was in transition at the time of his death.”
The executors state that, as such, Michael's financial and legal documents were "scattered around the country and the location of many documents was not ascertainable." They also state in court documents that "although more than a decade has passed since Michael Jackson's death, from time to time, the Executors must deal with consequences of the circumstances that existed at the time of Michael Jackson's death."
And while "the executors have eliminated the Estate's debt, have resolved virtually all of the creditors' claims and litigation, and have successfully solidified the MJJ business [after negotiating with Sony, in 2012, to buy an interest in EMU Music Publishing and then selling that interest in 2018 for $300 million] as a significant entity in the music industry, there remain challenging business, tax and legal issues that the Executors and their counsel continue to deal with."
This is why, the executors claim, they want the court to "allow, authorize and approve of compensation to the attorneys designated below for extraordinary services rendered in the amounts set forth, which the Executors believe represent the reasonable value of the services rendered." The amount listed in the court documents -- totaling more than $3.5 million -- would be paid out to a litany of firms if the judge OKs the request.
This is the latest development in an estate battle between Michael's family. Back in May, a filing from the executors under the King of Pop's will decreed that his beneficiaries (Michael's three children -- Prince Jackson, 27, Paris Jackson, 25, Blanket "Bigi" Jackson, 22 -- and his mother, Katherine Jackson) will not receive distributions until the estate's dispute with the IRS is resolved.
The executors, instead, suggested that until all disputes are resolved and the estate tax return litigation is concluded, the estate continues to provide for Katherine and the kids through "the family allowance."
Katherine had previously accused the executors of trying to keep a tight grip over the money the estate distributes to the trust and, in turn, its beneficiaries. She stated in court documents obtained by ET that "it seems clear to [her] that the Executors are holding all of the assets in the Estate in order to keep control over them, and to avoid the more liberal distribution of requirements of the Trust."
The accusation came amid her own legal battle with her grandson, Bigi, over the cost of her attorney fees.
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