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There is nothing the press likes more than a celebrity scandal and former Wimbledon champion, Boris Becker, has had his time fair share of time in the headlines. Despite amassing considerable wealth during his career (estimated at around £38million) Becker found himself bankrupt in June 2017. In the last few weeks, he has hit the headlines again over his financial problems, this time with some very serious consequences.
As you may know, the term ‘bankruptcy’ does not apply to most businesses and a limited company cannot be bankrupt. Insolvency, when a business is not in a position to pay its debts, and bankruptcy when an individual is not able to pay their debts, are two distinct processes under law. However, they do share one very important underpinning principle. It is vital that you fully cooperate and give all the information required to the professionals dealing with your situation. One of the areas where Boris Becker ran into problems was not declaring all his assets and hiding other key matters such as debts. Honesty is not only the best policy, but it can also be the thing that stands between you and potential prosecution. Bankruptcy and insolvency may be different things, but if you want to stay on the right side of the law for either of them, being honest about your position is vital.
I suppose first we need to acknowledge that there is a lesson to be learned here about avoiding bankruptcy in the first place. Some of the spending involved was frankly eye watering. A £22,000 a month house rental was one that particularly stood out. The sad thing is that there were probably many costs that could have been cut and many expenses reduced during the run-up to his bankruptcy. Perhaps this would have been a drop in the ocean compared to the size of his debts but in many bankruptcies, more could have been done sooner. No matter the size of your commitments or debts though, the simple fact is that once there is not enough money in the bank maintain them, you have a problem.
The real thing to take away from the Becker case though is that he has been convicted of a completely avoidable crime. He was found guilty of concealing debt to the tune of €825,000 (almost £700,000) which was linked to an interest in a large house in Germany, a property which he also failed to declare. There was also a further charge involving hiding 75,000 shares in a business. A fourth charge involved inappropriately moving funds from his business account. Again, these are huge sums of money, but the point here is the criminal activity was entirely avoidable Had Becker been entirely open and honest about his assets and debts in the first place he would probably not have been facing a court.
When you are in a bankruptcy situation it is not for you to decide what you should or should not include. Let yourself be guided by the people who are appointed to deal with your finances. The bottom line is that if you are honest and open you will fare considerably better than if you try to buck the system.
Every aspect of our financial lives is recorded and stored somewhere. When you are going through the bankruptcy or insolvency process, all your accounts and records will be meticulously checked. If there is a problem, it will be found and investigated to check whether there was any illegal activity. In this case, it will probably be cold comfort that he also was acquitted of 20 other charges while he is serving his prison sentence. The bottom line is that if you are in a position where you think you need to declare yourself bankrupt (or your business is insolvent) honestly is always the best policy.
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