Bankrupt: Girls Gone Wild?

Don’t click on the Girls Gone Wild (herienafter, GGW) link unless you are ready to view X rated material.

Which, they supposedly get for free, so, why file bankruptcy?

Well, it is Chapter 11 bankruptcy, so they are not going out of existence.  Yet.

GGW has a debt problem.  It owes Steve Wynn, of Bellagio fame, $7.5 million for a slander judgment, as well as a disputed $2 million gambling debt.

 A woman won $5.8 million for using her image improperly.

With only $50,000 in the bank, well, not enough money to pay the debts.

Are these debts dischargeable in bankruptcy?

Well, the judgment was against the individual owner of the GGW companies, Jim Francis.

In 2008, the casino sued Francis to collect the gambling debt. Francis accused Wynn’s organization of employing hookers and deceptive practices to keep him gambling as his losses mounted. Wynn responded with a defamation suit in Las Vegas.

In September, Wynn was awarded $20 million by a Los Angeles County jury in a slander lawsuit against Francis, after the Girls Gone Wild founder told reporters that the casino owner had threatened to kill him.

(from the L. A. Times story)

 Wynn took offense, sued, and won.  Now he is trying to collect from the assets of Mr.  Francis, who owns the GGW corporations.  He says the Chapter 11 bankruptcy filings will NOT slow him down.

If you are not familiar with the, uh, business model, of GGW, it goes around the country looking for young inebriated or otherwise judgment impaired women, and takes videos of them when they remove some or all of their clothing.  They string them together and sell them as DVDs.

Just another wholesome American business.

“Girls Gone Wild remains strong as a company and strong financially,” Francis said in a statement. “The only reason Girls Gone Wild has elected to file for this reorganization is to restructure its frivolous and burdensome legal affairs. This Chapter 11 filing will not affect any of Girls Gone Wild’s domestic or international operations. Just like American Airlines and General Motors, it will be business as usual for Girls Gone Wild.”  (also from the L. A. Times story)

Chapter 11 bankruptcy, like Chapter 7 or Chapter 13, protects assets from creditors.  So the GGW companies can keep operating, but, Mr. Francis debt cannot be discharged in the bankruptcy of another entity.

Just as if you file bankruptcy, and get a discharge of a credit card held jointly with your wife.  She still owes the money.

The libel verdict is for an intentional tort, meaning to harm another, so would be difficult to discharge even if Mr. Francis filed a personal bankruptcy.  Which is probably why he had his companies file.