Same story, different stock… Just a couple of weeks ago, it happened in Oklahoma City (see Bankruptcy Can Loom Even For A Billionaire) and now it’s happened here in Indiana. The CEO of Chesapeake Energy, Aubrey McClendon, who’d borrowed massive amounts of money to finance the purchase of Chesapeake shares, got hit with a margin call from his broker that forced him to sell a large portion of his multi-billion dollar net worth to pay his loan. Now, I learned, the retired chairman of Duke Realty, John Wynne, went through the same thing very recently here in Indianapolis when Merrill Lynch sold millions of dollars’ worth of Duke Realty shares to cover Wynne’s borrowing.
Although most of my Indiana bankruptcy clients are everyday working folks rather than billionaires, as a bankruptcy attorney in Indiana for more than two decades, I’ve seen my share of financial reversals. And, whenever I share stories about rich people who have financial difficulties, it’s certainly not to gloat over anybody’s misfortune. My purpose is always to encourage people who have allowed myths about bankruptcy to get the help they need, and to understand that they’re not alone.
In his Indianapolis Business Journal’s “Behind the News” column, reporter Greg Andrews writes that, in uncertain economic times, there is concern that margin calls might be the downfall of corporations whose CEO’s borrowed money to invest in company stock. “Like the rest of us,” says Andrews, those executives “didn’t foresee the market’s going down as much as it has.”
As I well know from dealing with tens of thousands of different clients over the years, “life happens” even to some very, very smart and enterprising and even very rich people. It’s precisely for that reason that our society has created the bankruptcy safety net system to provide relief and a chance for fresh start.