The head of a multibillion-dollar Texas company told a judge that the recession has left him professionally and personally on the verge of insolvency and that his net worth is below zero, leaving him unable to pay his wife the financial settlement she is seeking in their divorce.
The woman contends that her husband’s 2010 tax returns showed that he earned more than $36 million in adjusted gross income. He says his earnings actually totaled just $1 million or $2 million, and his net worth has plummeted to a negative $50 million.
Representatives for the wife, however, said the man can afford to pay his debts to her. His wife wants the judge to force him to pay her half of the couple’s community property, up to $5 million, as agreed to in their prenuptial agreement. The couple had been married six years when the man filed for divorce in September 2011. They have two daughters, ages 6 and 3.
Texas is a community property state, which means there is a good chance that if the couple can’t agree on a settlement, the judge is likely to treat all assets obtained during the marriage as jointly owned. But in this case, the couple did have a prenuptial agreement in place.
The woman said her husband owes her $104,000 under a previous agreement. She also wants $20,000 per month in support and attorney fees. Her case got a boost in court from a former senior manager at the man’s company. He testified that the man told him that his goal was to shrink his net worth so that his wife would receive a smaller settlement.
Even if he is not insolvent under the traditional principles of accounting, the man said he is by the standards of family law in Texas. He told a Dallas judge that his company’s revenues have fallen from $39 billion to $23 billion since the end of 2007.
Source: Business Week, “Highland Capital Chief Tells Divorce Judge He’s Insolvent,” Tom Korosec, March 29, 2012