The Price is Wrong for bankrupt model Katie
Her proposal for an Individual Voluntary Arrangement (IVA) was accepted on November 30th last year but renewed bankruptcy proceedings were brought after she failed to keep up with the terms of the agreement requiring an approx. £12,000 monthly payment to her creditors.
Thrice married Price, aged 41, has five children from previous relationships and is currently with her third husband after two expensive divorces.
Two of her companies, Pricey Media Ltd and Marvellous Creative Group Ltd, were both placed into Members Voluntary Liquidation (MVL). Her remaining companies KP Bling Ltd had £100 of assets when they were last reported in May 2018 and KDC Trading made a loss of more than £21,000. She resigned from her clothing company KP Boutique in June after it made £13 profit last year.
Her accumulated debts which led to the IVA are quite eye-opening:
- £100,000 mortgage arrears on her infamous nine-bedroomed home in West Sussex more popularly known as the “mucky mansion” due to its unkempt state despite spending an additional £120,000 annually on housekeeping staff
- £800,000 owed to numerous existing creditors
- £2,000,000 in legal costs and undisclosed damages to her first former husband, pop singer Peter Andre and undisclosed damages awarded against her after claiming he was unfaithful. There were also costs awarded against her for additional allegations made against her former manager, claiming she was in cahoots with Andre.
- £150,000 in legal costs and damages to her second former husband, cage fighter Alex Reid after she played private sex-tape footage of him on her smartphone to a studio audience.
- Undisclosed legal fees from previous divorces and assorted driving offences resulting in a disqualification.
- £22,000 in County Court Judgements lodged against her in the previous 12 months
- £68,500 in annual beauty treatments including plastic surgery, massages and hair extensions
- £50,000 on paying off her current estranged husband, Kieran Hayler’s credit card debts and a new car.
- Over £1,000,000 on a working farm with 80 chickens, two goats and three pigs. This also includes a Land Rover and a £40,000 milking machine
- Private school fees for two of her children and full-time care costs for eldest son Harvey who has autism and Prader-Willi syndrome.
- She was able to recoup some £14,000 from selling her two showjumping horses and she still has some Llamas for sale for £2,000 each.
At the height of her fame, Katie Price, also known as Jordan early in her career, was worth £45m from glamour modelling, personal appearances, books, starring in reality TV shows like Celebrity Big Brother and I’m A Celebrity, Get Me Out Of Here and other ventures using her name or likeness.
An IVA is a formal and legally-binding agreement for an individual to make monthly repayments to their creditors.
It’s a workable and credible alternative to bankruptcy and can last anywhere between five and seven years.
In the event of bankruptcy however, a licensed Insolvency Practitioner or official receiver will act as trustee which places them in charge of the assets. This means they decide what they can spend money on above basic living expenses during this period of bankruptcy.
Borrowing is also curtailed with any amount over £500 that you want to loan having to be declared in advance although being in bankruptcy it’s unlikely that any application for finance would be accepted.
Credit scores are impacted and the bankruptcy will stay on file for at least six years. If the terms of the order are broken then restrictions could be extended for up to 15 years.
In cases where a lot of debt has to be paid then any houses owned could be sold, although the owner will be given 12 months to find a new place to live. There may be other economies that have to be made if there are other saleable assets that could be realised to raise funds.
Chris Horner, Business Rescue Expert’s Insolvency Director said: “An IVA is not a financial death sentence or a life sentence for penury.
“An IVA can be a positive for many people as it brings financial discipline into their lives, especially if they haven’t had much previously or learned to manage their money properly. .
“It’s like a money coaching exercise – people with one have to learn to live within their means and it can give them a sense of purpose to take responsibility about planning and spending in advance rather than just reach for a credit card or get further into debt.
“Having to think about a purchase rather than just saying yes on impulse is a skill which some people never learned and some enjoy practising once they learn how to do it.”
If your personal finances are in a state that even Ms Price would wince at then you should get in touch with us.