Rapper will use Chapter 11 Bankruptcy to reorganize his debts.
It’s tempting to be jealous of celebrities, but with the celebrity-sized paycheck often comes celebrity-sized debt. This certainly seems true in the case of rapper 50 Cent, who recently declared over $28 million in personal debt in a federal bankruptcy court filing.
According to the filing, the rapper’s biggest debts come from his legal troubles. Sleek Audio, a Florida company that sued him for stealing their headphone design for his own line of merchandise, won a judgment of $18,428,257. More recently, a Florida woman named Lastonia Leviston won a judgment of$5 million against 50 Cent for humiliation associated with the rapper’s online posting of a private sex tape featuring Leviston. Additionally, 50 Cent disclosed another $1 million in debt owed to his attorneys.
50 Cent, aka Curtis Jackson, is considered one of the most enterprising and richest rappers on the planet, with an estimated net worth of $155 million according to Forbes magazine.
So why would this rich rapper need to visit bankruptcy court?
According to his bankruptcy attorney, Mr. Jackson is pursuing Chapter 11 Bankruptcy as means of “reorganizing” his personal and business obligations. Indeed, Chapter 11 is designed for exactly this purpose. Using Chapter 11, a debtor who proves he cannot keep pace with his debts at their current rate can create a plan for paying his debts based on both existing assets and future income. Assuming the plan is approved, the payments will last for a number of years at which time any remaining amounts owed on the eligible debts will be discharged.
While Mr. Jackson may very well have a sincere need for restructuring his debts, some experts believe he is really after a side benefit of filing for bankruptcy: protection from creditors.
During a bankruptcy filing, creditors must stop all collection activities, unless they obtain special permission from the court. So who does 50 Cent want protection from? Ms. Leviston. In addition to the $5 million already awarded, Ms. Leviston also received an unspecified amount of “punitive damages” which experts estimate could total an additional $5 to $10 million. By filing for bankruptcy, the deliberations as to the value of these punitive damages have been stalled. Additionally, the case will be removed from the state courts to the federal bankruptcy courts, which may be less sympathetic to Leviston and award a lesser amount of damages.
Need Help with a Bankruptcy of Your Own?
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