The band had originally signed with a company called Shelter. However, some time during the release of their new album, MCA records bought out the company for more money. As the front man of the band, Petty attempted to compromise with MCA about his contract and finances. MCA chose not to work with Petty in helping meet his financial demands, which resulted in Petty filing for bankruptcy in ’79, which was only just the beginning of distress that he would face.
Tom Petty was not a man that would back down if he believed it to be. Originally when signing with Shelter, the band mates were all very young and inexperienced with the contracts, deals, and publishing. So when the time came that MCA was to buy Shelter out Petty and the band mates were confused and angry. They had originally incorporated a clause into their contract stating that if Shelter were to be bought out by anyone ever that the band would be let go of without issue. However, when brought up with lawyers, Petty and the band were told that this would not be honored and that they had been misled. This was an on-going and very long period of time where Petty had to fight it with all his power. Denny Cordell was who originally signed them to Shelter. He and Petty had a strong friendship aside from being his producer until this happened. Petty felt betrayed by Cordell in that of he didn’t believe Cordell had been honest with him upon signing. The band mates put their trust in him and backed him up every step of the way. They were not going to give their records to anyone without their names attached to it, which caused a lot of distress for lawyers and MCA. But, Petty refused to give in. He stood his ground and ensured that him and his band would be honored the right way.
After a stressful period of time the band faced, they finally reached an agreement in which Tom Petty and the Heartbreakers decided to sign with Backstreet Records who was owned by MCA. The lawyers of MCA came to the agreement that Petty and the Heartbreakers could have their own independent label so long as they could still be the one’s releasing. Without any hesitation the band gave the okay.