• February 23, 1998
• Vol. 49
• No. 7

Taking a Licking

Singer Toni Braxton Goes for Broke by Declaring Bankruptcy

AS POP DIVAS GO, TONI BRAXTON lives rather modestly. She employs only one assistant and leases a Lexus. (She won her Porsche in a friendly bet.) Even her two-bedroom condo in Century City Calif., cost "well under $1 million," says her entertainment lawyer Gary Stiffelman. "She lives far below [the level] anyone would expect someone of her success and stature to live," he adds. So why, then, did the Grammy winner, who has sold an estimated 17 million albums since 1993, file for bankruptcy in Los Angeles on Jan. 23?

Her lawyers blame her 1991 contract with LaFace Records, which is co-owned by her longtime producer Kenneth "Babyface" Edmonds (neither Braxton nor Babyface would comment). Stiffelman claims the contract has resulted in Braxton's receiving less than 35 cents per album sold and that it holds her responsible for a portion of the cost of promotion, videos, the revealing designer duds she sports onstage and all her album-making expenses. Compounding the problem, says one of her attorneys, were some of the singer's representatives, two of whom she has fired. It turned out that Braxton, 31, was unaware of her meager royalties and mounting debts until late December, when she finally examined her finances herself.

What Braxton learned, says an associate, "was shocking to her." By last month, debts she ran up on tour and living expenses were approaching $3 million. Stiffelman estimates that Braxton's multimillion album sales have generated close to a $75 million profit over seven years. Yet, he says, her contract left her only $1.8 million after taxes and representatives' commissions over the same time period.

Of course, that's the she-said side of this imbroglio. "We sense that this is a negotiating tactic," says a LaFace spokeswoman, who rightfully points out that Braxton's royalty rate for her 1996 album Secrets was increased to $1.70. "The frustrating thing," the spokeswoman adds, "is that the record company has spent millions creating a superstar." Now that superstar's future will be decided by a judge after Braxton files her financial statement, which is due March 2. "If the bankruptcy goes through," says Thomsen Young, another of Braxton's attorneys, "she would no longer be under contract for LaFace, but she stands to lose her condo and cars," among other possessions. However, if the court decides she filed in bad faith, says Stiffelman, "then she's back to where she was"—deep in debt.