50 Cent filed for chapter 11 bankruptcy, in a move that seems to baffle everyone. Everyone is trying to decipher the possible motive behind the move?
Is Fif really broke? How does a man estimated to be worth $155m just two months ago by Forbes be broke? Is it a legitimate deal, or is it just an attempt to weasel out of paying the $5m he was ordered to pay Lastonia Levinston?
BET made the attempt to decipher everything, speaking to entertainment lawyer Cassandra Spangler. Cassandra touched on several of the issues raised, such as 50’s probable motivation for filing and what it allows him to do or not do.
Below are excerpts…
What does Chapter 11 bankruptcy entail?
What the lawyer said:
“Chapter 11 bankruptcy is different from Chapter 7 bankruptcy, the form of individual bankruptcy most people are familiar with. In Chapter 7, the debtor’s assets are transferred to a trustee, whose job is to sell off assets and pay creditors. Chapter 11 is typically used by businesses, but can be used by individuals (typically with too much income to qualify for Chapter 7 and too much debt to qualify for Chapter 13).
“A key difference between Chapter 7 and Chapter 11 is that in Chapter 11, the debtor generally retains ownership and control over his, her, or its assets as a “debtor-in-possession.”
“In Chapter 11, the end goal is to confirm a plan that deals with the debtor’s liabilities.”
What does it mean?
The first thing to note about Chapter 11 bankruptcy is that it is different from Chapter 7. Whilst chapter 7 means the person loses ownership of whatever assets they may have remaining, chapter 11 leaves you still in charge of your assets, or as a ‘debtor-in-possession’
So 50 would retain possession of his assets, whilst a court would decide on a plan for how to pay any debts going forward, and even how much of it he has to pay in view of the bankruptcy.
Would he still have to pay the $5m judgement?
What the lawyer said:
“Not necessarily. The bankruptcy filing prevents her from taking any action to collect on the jury award without Bankruptcy Court approval, but the treatment of the judgment under the plan is an open question at this early stage of the case. If the plaintiff in that case is able to prove that her claim arose from fraud or wilful and malicious injury, she might be able to obtain a ruling that the judgment is nondischargeable – meaning it essentially “rides through” the bankruptcy unaltered, even if the plan provides for partial payment of the judgment”
What does it mean?
It would all depend on the judge in charge of the bankruptcy plan. If Levinston can prove that the judgement she earned is due to fraud, or caused her malicious injury, she would still be paid. However, even if she can prove that, it is unlikely she would receive the full payment under the bankruptcy plan.
What about his business entities?
What the lawyer said:
“That depends on the structure of his businesses. If he has separated his business interests into separate entities and maintained the proper legal boundaries between them (that is, if he hasn’t commingled business and personal assets), the assets of his business entities probably aren’t within the grasp of his personal creditors. His ownership interests in those entities, however, are property of his bankruptcy estate, and their value will likely be a major factor in his ability to confirm a Chapter 11 plan”
What does it mean?
Curtis is also a burgeoning business executive, and has many business holdings including a clothing line, and several endorsements. Whilst the bankruptcy would affect his personal fortune, it would not affect his businesses assets, if he was careful enough to keep a legal boundary between them.
However, their value can help him get the chapter 11 plan, which is what would leave him as a ‘debtor-in-possession’.
So is 50 Cent “broke”?
“Not necessarily. Chapter 11 bankruptcy is often invoked to permit businesses and individuals to restructure their debts due to cash flow concerns, even if the value of their assets is greater than the value of their debts. As noted, 50 will be permitted to retain his assets while working to formulate, propose, and confirm a Chapter 11 plan”
So there, he is not particularly broke. Like he said himself, it’s a strategic move. He probably did not do it solely to escape paying the $5m judgement, but he’s probably laughing because it allows him to possibly dodge the judgement, or at worst pay just a fraction- as determined by the judge.