As you may already know, Rich Dad Poor Dad is one of my favorite books. I continually recommend the book to my peers and those looking to change their financial future. When I first heard this news I was amazed, and to tell you the truth, I was very disappointed. I was disappointed that someone that I have studied and looked to for financial advice was now broke.
How could this be? The very principals that I built my wealth and financial freedom on where taught to me through his materials. Was I setting myself up for disaster? I racked my brain to find wrong in what he teaches. I analyzed what I am doing within my portfolio and businesses to ensure that I was not setting myself up for the same fate.
Then I did what is often very hard to do… I stopped and analyzed the situation from a non-emotional stance. What I soon realized was actually a lesson I learned from Rich Dad Poor Dad. Let me start by saying that I understand that Bankruptcy is a sensitive topic. While I am not a huge proponent of bankruptcy it is important to understand that the government created bankruptcy to protect each of us.
Upon analyzing the situation with the Rich Dad Poor Dad’s Bankruptcy, I realized that Robert Kiyosaki himself did not file bankruptcy and in fact his businesses are still running strong. What filed bankruptcy was a corporate entity within the Rich Dad Poor Dad umbrella. Suddenly I was reminded of some basic yet important information that is taught by Rich Dad Poor Dad.
What happened in this situation is a classic example of why you should practice the points above. Rich Dad, was sued by the Learning Annex and a $24 million judgment was placed against the business. The business assets of the corporate entity that was sued were only a couple million dollars. Clearly the entity did not have the money to pay back this judgment and the reality of such would make it nearly impossible for the entity to create the income needed to pay off the judgment. However, because Rich Dad followed his own advise he was able to file bankruptcy and protect his nearly $80 million of personal net worth according to Forbes.
While I don’t want to argue the right or wrong of this bankruptcy it clearly shows how properly structuring your corporate entities can protect your personal assets. None of us know when we may be hit with a frivolous lawsuit that would cripple us financially if a judgment was awarded. If you are not currently using a strong corporate structure to protect yourself then take this as an example of why you need to! So it looks like Robert Kiyosaki is still teaching us, even if it is not the lesson he would like to be teaching!
Question: What do you think about this bankruptcy? Is it good business or bad business?