Could the CEO of a firm worth billions of dollars escape paying spousal support if he shows a family court that he and his company are insolvent? That is exactly what the head of a financial services firm told a Texas judge in a battle over the executive’s commitment to a prenuptial agreement.
The 49-year-old CEO claimed he could not live up to a prenuptial agreement that would give his wife half of the couple’s property, up to $5 million. The executive’s wife told the court her husband is far from insolvent. He reportedly pays $20,000 in monthly spousal support and owes his wife more than $100,000. The judge in the case must decide whether the wife’s spousal support is necessary and if the husband must pay her legal fees.
The man’s company had $23 billion in assets at the start of 2012. The figure sounds healthy, but the CEO claims the firm was worth a lot more before the recession. In 2007, the company had an estimated value of $39 billion.
The husband stated that under business accounting rules, he and his Dallas-headquartered company would show a “negative net worth” due to pending lawsuits.
A company statement read before the court seemed to conflict with the CEO’s opinions. Officials stated the debt-investment firm is not insolvent. Company authorities claimed the business made several positive financial strides with investors and was in the process of expanding internationally.
A former employee testified for the CEO’s wife. The man told the judge he had a lunch meeting with the CEO, in which the husband allegedly said that he was working to minimize his net worth to avoid payments to his wife.
If the man is lying about his financial situation, he could have to honor the prenuptial agreement. If he was worried about giving too much away in a divorce, he should have tried to negotiate an agreement more acceptable to him before marrying.
Source: Bloomberg, “Highland Capital Chief Tells Divorce Judge He’s Insolvent,” Tom Korosec, Mar. 29, 2012