Young, 47, whose assets were estimated at more than £400m has been locked in a three year court struggle with estranged wife Michelle, a former model, who had claimed she has evidence he is still worth millions.
However following Young's bankruptcy revelations she could end up not receiving a penny.
The couple married in 1995 and split in 2006. Young counts Topshop tycoon Sir Philip Green and Russian oligarch Boris Berezovsky amongst his friends.
The High Court heard last December that Young had liabilities of £27m after his property empire collapsed and he was being propped up by a number of wealthy friends, including restaurateur Richard Caring.
Young had been threatened with up to six months in jail for contempt of court if he did not come clean about his finances. The court then ordered Young to pay £27,000 a month in maintenance to Michelle Young to cover living expenses and legal costs until a full hearing next month.
But Young has now said that a bankruptcy petition has been filed against him for just under £2m by Her Majesty’s Revenue and Customs earlier this month and he cannot afford maintenance payments.
A bankruptcy trustee is set to be appointed shortly to deal with his financial affairs.
Young said: “I have battled for some years and hopefully this will bring closure and allow me to move on. I have every intention of looking after the children and my wife to the best degree I can.”
The judge presiding the case, Mrs Justice Black, said that any orders for money made against him are now “academic” as he has been made bankrupt by the tax man.
Black said that Michelle Young's legal team must now consider whether to allow the trustee in bankruptcy to investigate her husband's financial affairs "rather than proceeding to incur further costs by doing so themselves".