It’s hard to believe that a huge pop star, Rihanna, signed to Roc Nation, with huge endorsement deals with the likes of MAC Cosmetics, successful perfumes and clothing line with River Island, ‘Styled to Rock‘ TV show, and touring non stop (she’s working on her eighth album) was at one point bankrupt.
According to TMZ, Rihanna had only $11 million dollars cash in 2009. By the end of the year, she learned she had only $2 million remaining and to make matters worse her expenses had doubled, essentially leaving her broke. The same year she purchased a house priced at $7 million $7 1/2 million, but sold the house for a $2 million dollar loss.
This lawsuit is in connection to the lawsuit she filed about a year ago. If you remember, Rihanna sued her former accountants for tens of millions of dollars in losses from four national and international tours, shady bookkeeping and failure to advise her to cut expenses as her 2009 ‘Last Girl On Earth’ tour was losing money and was under an IRS audit. According to ABC News,
By the “Last Girl on Earth” tour in 2009, Rihanna learned that the tour had managed “significant net losses” despite robust revenues, though the defendants had managed to pocket 22 percent of the tour’s total revenues while paying Rihanna just 6 percent of revenues, the lawsuit said. It said Berdon’s unusual accounting practice of paying itself a percentage of gross tour income as commissions left it no incentive to “counsel” Rihanna to reduce expenses or put in place appropriate financial controls.
The lawsuit alleged that the practice of paying itself commissions on revenues was not standard in the accounting and business management industry and created a clear conflict of interest.
Rihanna’s lawyers also blamed the accounting firm for an ongoing IRS audit of her tax returns, saying she was forced to spend significant resources to correct errors resulting from negligence.
According to the lawsuit, the singer hired the accountants in 2005 when she was a 16-year-old from Barbados launching her career. She alleged that they repeatedly breached their agreements, engaged in misconduct and malfeasance, paid themselves excessive commissions, created entities without regard to their effect on her taxes and failed to document revenue and expenses and implement a proper budget.
Since then her fortune has doubled. During her June 2011 ‘Loud’ tour she pocketed 40 percent of the revenues and her net worth is now over $40 million. Celebs suffering from bankruptcy is nothing new. Toni Braxton, TLC, Donald Trump and Michael Jackson have all filed bankruptcy at one point. It’s great that Rih Rih was able to bounce back.
[ABC News, Instagram, TMZ]