Tom Petty declared bankruptcy in 1979 in an effort to free himself from his contract with Shelter Records.
At the time of Tom Petty’s bankruptcy filing, he had little to show financially for the two hit albums already behind him: 1976’s Tom Petty and The Heartbreakers (featuring the hit singles “Breakdown” and “American Girl”) and 1978’s You’re Gonna Get It! Unhappy with the terms of his contract with Shelter Records, Petty seized upon the sale of Shelter by ABC to industry giant MCA as justification to declare himself, in effect, a free agent.
Petty refused to allow his next album to be released, even going so far as to bear the cost of recording it personally, leaving him some $500,000 in debt. This was when he filed for bankruptcy, hoping to gain leverage in the brewing legal dispute by having the bankruptcy court declare null and void an extremely unfavorable contract that Petty felt he had signed under duress.