Reports in the United States indicate that Curtis James Jackson III, better known as famous Rapper “50 cent”, has filed for Chapter 11 bankruptcy.
This move puts an ironic slant on the title of the rapper’s breakout album: “Get Rich or Die Tryin’.”
The filing comes just days after a jury ordered him to pay a woman $5 million in damages in relation to his part in a leaked sex tape.
Lawyers for 50 Cent have stated that his business interests will continue unaffected by the Chapter 11 filing.
The Chapter 11 bankruptcy process in the United States is considered to be a far more “debtor friendly” approach when compared to the Australian legislative landscape, which is considered more “pro creditor”. The Chapter 11 bankruptcy provisions have some similarities to Personal Insolvency Agreements under Part X of the Bankruptcy Act 1966 (Cth).
A Chapter 11 bankruptcy in essence allows a debtor to reorganise, or restructure, their finances in order to address their liabilities. The debtor is able to prepare a plan on how the debts will be paid, how much of the debts will be paid and when they will be paid. This must then be presented to creditors for approval.
50 Cent will be able to use his existing assets, as well as future income, to make the proposed payments. While he prepares his proposal, he is ‘protected’ from enforcement actions by any creditors.
To be eligible for Chapter 11 bankruptcy, a debtor must be able to show that they will run out of money if they continue to pay their liabilities at the current rate. While Chapter 11 bankruptcy is traditionally used by corporations, it is also available to higher income individuals. For an individual to be eligible for Chapter 11 bankruptcy, a bankrupt must have just over $1.08 million of secured debts, or $360,000 of unsecured debts.
The filing of personal bankruptcy will allow 50 Cent’s businesses to continue promoting him as an entertainer. Chapter 11 bankruptcy is often used in the USA as a strategic tool by entrepreneurs to try to revive a business that might otherwise fail.
50 Cent joins other wealthy American’s ‘in da club’ who have filed for bankruptcy protection, including MC Hammer, Donald Trump, Mike Tyson and Walt Disney.
For more information please contact ERA Legal.
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