Even if you are a multi-billionaire, you are at a risk going bankrupt and losing it all.
Today, we are looking at billionaires who built a fortune but, a series of bad decisions and other factors landed them in a pool of debt that they failed to repay.
1. Pramod Mittal, brother of Lakshmi Mittal, was declared the ‘most bankrupt man’ in June 2020. He was allegedly accused of owning £2.5 billion to a lot of people.
Businessman Pramod Mittal came into the limelight in 2013 for throwing a lavish wedding for his daughter that cost nearly ₹505 crores. He was once one of the richest men in the UK but, in June 2020 he was declared the ‘most bankrupt man’ by the London High Court. He reportedly owes £2.5 billion (₹24,155 crore approximately) to a lot of people including his father, wife and other family members. He ultimately had to rope in a third party to deal with the “legal costs of his bankruptcy.” According to a report by TOI, his creditors agreed to his proposal of IVA (individual voluntary arrangement) where he now has to pay only $4.4 million (nearly ₹42 crores) of the total amount he owes.
2. Nirav Modi, who was once known as the diamond king, was arrested and sent to prison after he was accused of duping PNB Bank of nearly ₹13,000 crore.
Nirav Modi built a diamond empire but, it all came crashing down in 2018 when he and his uncle Mehul Choksi were accused of duping PNB Bank of nearly ₹13,000 crore. This was undoubtedly, one of the most controversial scams in India. Cases against him are still going on in the UK (he fled India and took shelter in the UK). In fact, in February 2020, some of his personal items were auctioned, which included a rare painting by MF Hussain worth ₹12-18 crore, a Rolls-Royce Ghost, ₹55 lakh limited edition watch and more. Though, through the court, the PNB Bank has managed to recover only $3.25 million (₹24.2 crore approx.) Currently, Nirav Modi remains at Wandsworth Prison, where he has been lodged since his arrest in March 2019.
3. Vijay Mallya, the King of Good Times, went from being a rich businessman to being a fugitive after he failed to repay a loan of ₹9000 crores which he took from numerous banks in India.
Vijay Mallya was another business tycoon in India who went from riches to rags in a matter of a few years. Mallya allegedly fled India after he owned numerous banks a collective amount of ₹9000 crores, which he took as a loan to keep his now-defunct Kingfisher airlines from failing. After that incident, as many as 12 Indian banks filed a petition for Vijay Mallya to be declared bankrupt. He is now in the UK where the London High Court recently gave him a bankruptcy reprieve stating that he should be given time to first settle his petitions in the Indian courts. Mallya cannot be brought back to India till secret legal proceedings in UK get resolved, meanwhile many of his assets have been seized by the ED to recover the lost money. Apparently, he’s broke now and lives off his children and partner.
4. BR Shetty, the founder of NMC Health, lost his empire after being accused of fraudulent financial practices.
BR Shetty was once a billionaire who owned all the luxuries in the world. From vintage cars to private jets, he had it all but, unfortunately the golden days didn’t last long. The pharmaceutical entrepreneur and founder of NMC Health was accused of fraudulent financial practices. Reportedly, his company NMC Health was declared bankrupt as it had an undisclosed debt of $6.6 billion (₹49,100 crore approx). As of now, Shetty is facing a legal challenge in India as Bank of Baroda has sued him for backing away from an agreement to give the bank 16 properties as collateral for debts and to secure additional guarantees. Currently, he and his wife have resigned from their position at the company that still struggles to stay afloat. A criminal complaint has also been filed against NMC Health by the Abu Dhabi Commercial Bank.
5. Anil Ambani, brother of Mukesh Ambani, declared bankruptcy in 2019 after he failed to repay loans to three Chinese bank and the SBI.
Despite being the brother of Mukesh Ambani, one of the richest men in Asia, Anil Ambani, the Chairman of Reliance Group is on the edge of bankruptcy. Reportedly, he has been accused of failing to repay a loan of $925 million (₹6,882 crore approx.) that he took from three Chinese banks and a loan of ₹1,200 crore which he took on a personal guarantee from SBI. For the same reasons, his company, Reliance Communications had filed for bankruptcy in 2019. In fact, he told the UK court that his ‘net worth is zero’.
6. Ramlinga Raju, CEO and Chairman of Satyam Computers admitted that he embezzled the company of ₹7,140 crore.
Satyam Computers an IT firm, owned by Ramlinga Raju, was highly successful in the 90s but, it ultimately collapsed and was forced to shut down in 2015. One of the major reasons for the collapse of the company was Chairman and CEO of the company, Ramalinga Raju who reportedly admitted that he embezzled the company of ₹7,140 crore. He also admitted to falsifying revenues, margins and over ₹5,000 crore of cash balances of the company. He ultimately had to resign from the company. Though, within a month of being convicted Raju and all the others involved in the scam were granted bail by a special court in Hyderabad in 2015. The bail amount for Raju was set at ₹1 lakh and the other convicts were set at ₹50,000. As far as his company Satyam Computers is concerned, it was purchased by Tech Mahindra and was renamed Mahindra Satyam.
7. Subrata Roy, the CEO and Chairman of the Sahara group, found himself in trouble after he was accused of looting investors of ₹20,000 crore.
Subrata Roy was part of one of the biggest corporate scams in India- the Sahara chit fund scam. The Supreme Court in 2012 ruled that the Sahara group companies violated securities laws and illegally raised over $3.5 billion. In 2014, the Supreme Court of India ordered the detention of Roy for failing to appear before it in connection with the legal dispute with Market Regulator – SEBI. He was accused of looting investors of ₹20,000 crore. According to Live Mint, Roy was arrested in 2014 for non-payment of dues but was later released on parole in 2017. Despite the legal issues, he still remains chairman of the Sahara Group. As of 2020, Roy had deposited over ₹15,000 crore. However, SEBI has petitioned the Supreme Court to direct Roy to pay ₹62,600 crore ($8.43 billion) immediately, or cancel his parole if he doesn’t meet the demands.
8. Adolf Merckle was a German billionaire who killed himself after making a series of risky investments and facing a huge financial crisis.
For those who don’t know, Adolf Merckle was one of the richest people in Germany with a net worth of around $12.8 billion. Though his life changed in 2008 after he was hit hard by credit crisis in which he lost about $3.6 billion. By the end of 2008, his investment firm VEM faced a serious liquidity crisis and reported $6 billion dollars in losses. With no other option left, Merckle played a huge gamble by making a series of risky investments which backfired and caused him to lose more money. After losing all his assets, Merckle tragically died on the railway tracks close to his family villa in Blaubeuern, near Ulm in south-west Germany, after being struck by a train in 2009.
9. Robert Allen Stanford was sent to 110 years in prison for mail and wire fraud and for money laundering of over $8 billion.
Robert Allen Stanford was the Chairman of Stanford Financial Group, he was a former billionaire financier. However, he has been in jail since 2009 where he is serving a 110-year prison term for being part of a massive financial fraud. He landed in trouble after SEC launched an investigation on him and his company and charged him on account of fraud for illegally selling $8 billion in high-yield certificates of deposit in a massive Ponzi scheme. He was arrested in June 2009 for mail and wire fraud and money laundering obstruction of justice among other charges.
10. Eike Batista, who was once the richest person in Brazil, was arrested in a $100 million money laundering case.
Eike Batista, a Brazilian businessman lost a multi-billion dollar fortune in mining and oil exploration industry over a period of 20 years. In 2011, Batista was named the 8th richest person on Earth and the richest in Brazil but, his downfall began with a sudden crash in the mining industry and the collapse of one of his biggest companies OGX. In 2013, it was reported that he nearly lost $34.5 billion in just one year. After facing massive debts, his personal wealth dipped from $200 million to negative wealth. In 2017, he was finally arrested in a high-profile $100 million money laundering case (operation Car Wash).
11. Sean Quinn, an Irish businessman filed for bankruptcy in 2011 after multiple cases of liquidation litigation, corporate fines and fraud were filed against him.
Many companies were forced out of business and many billionaires went bankrupt during the recession of 2008. And, Sean Quinn, who was amongst the richest people in Ireland, was one of them. He purchased stakes in various multinational companies including Bupa Ireland and Anglo Irish Bank but, when the financial crisis hit the Irish banking system, Sean Quinn lost almost all of his family wealth. In 2008, one of his companies Quinn insurance was fined €3.25 million by Ireland’s Financial Regulator because of insider loans issued by the company. With multiple cases of liquidation litigation, corporate fines and fraud, Quinn finally filed for personal bankruptcy in 2011.
Their story teaches us an important lesson- even one small mistake can erase your entire life’s effort and can wipe out your wealth leaving you bankrupt.