Girls Gone Wild Has Gone Bankrupt

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Sex sells. Or at least it’s supposed to.

That’s not the case for Girls Gone Wild, though, as it has filed for Chapter 11 bankruptcy protection to avoid multimillion-dollar debts as well as jury awards. Girls Gone Wild Brands has over $15 million in debt, but lists its assets at less than $50,000.

So how did the popular company, which produces videos of college-age women drinking, exposing themselves and engaging in sexual intercourse at parties, bars, clubs and events, get there?

Bankruptcy and Lawsuits

Well, founder Joe Francis owes Las Vegas casino owner Steve Wynn $30 million — and listed a $10.3 million debt from that in the bankruptcy filing. The company was also sued in 2008 by Tamara Favazza, who claimed naked images of her were used without her permission. Perhaps society has less of a demand for GGW products, as it seems as though the exclusivity of GGW may have been lost with the Internet boom of the last decade.

Favazza won a judgment for $5.8 million, and her lawyers have been fighting to collect the money. But Francis has apparently moved his money around in order to avoid paying them. Favazza’s attorneys have tried to go after many of his assets, including his $30 million mansion in Mexico and $2 million Gulfstream jet.

Chapter 11 bankruptcy is typically used to restructure businesses, and Girls Gone Wild claims that is its intent. According to Francis’s executive assistant, Heather Brook, the company filed for bankruptcy “to restructure its frivolous and burdensome legal affairs.”  Essentially, they are so far in debt that they filed bankruptcy to avoid paying it — and will continue business as usual while the bankruptcy plan is settled.

Dodging Debt

This is a popular way to avoid paying off high-profile lawsuits that could cost a company millions, while carrying on with business as usual. Other companies that have filed Chapter 11 include Bloomingdale’s, Sbarro and Harry & David — and they seem to have recovered just fine.

The company says that the bankruptcy filing will not affect any of Girls Gone Wild’s domestic or international operations. A statement from the company said, “Just like American Airlines and General Motors, it will be business as usual for Girls Gone Wild.”

They also claim that Francis is no longer an owner, officer or employee of the company, which could complicate things quite a bit.

Though Girls Gone Wild will undoubtedly be back in action soon, perhaps now it has learned the importance of responsibility — and protection.



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