So, is 50 Cent suddenly broke?
Not necessarily. It is rare for individuals to file for Chapter 11 bankruptcy, a measure usually reserved for corporations that need to be restructured. But people looking to reorganize their debts might also use Chapter 11, bankruptcy experts say. For Jackson, the filing might give him more time to pay his debts and give him a chance to come up with a payment plan, an option he might not have without Chapter 11.
“By all accounts, he does not appear to be a celebrity who is in financial distress,” says Theodore Connolly, a bankruptcy attorney in Boston and co-author of “The Road Out Of Debt: Bankruptcy and Other Solutions to Your Financial Problems.”
In the bankruptcy filing, Jackson says that his debts and assets are worth between $10 million and $50 million, as reported by the Wall Street Journal.
So the artist isn’t exactly running out of money. But the move could be an effort to protect his businesses as he deals with his debts. Jackson’s filing comes just days after a jury ordered the rapper to pay $5 million to a Florida woman who sued him for posting a sex tape online without her permission, according to the Associated Press.
The filing could be a strategic effort to stay in control of his assets while he deals with the lawsuit, says Michael Venditto, a bankruptcy attorney and partner at Reed Smith. Because his debts exceed $10 million, according to the filing, Jackson doesn’t qualify for Chapter 13 bankruptcy, which would normally be used by individuals looking to restructure their debt. The limits are set at about $383,000 for unsecured debt and about $1.1 million for secured debt, Venditto says.
Filing for bankruptcy might give a person more time to pay judgments like the one that was just handed to Jackson, but it wouldn’t necessarily erase the debt, Connolly says. An individual might also file for Chapter 11 bankruptcy to attempt to restructure debts they haven’t been able to reorganize another way or to try to break service contracts, he says.
An attorney for Jackson confirmed the filing in a statement and said it would allow the artist to address “professional liabilities.” “This filing for personal bankruptcy protection permits Mr. Jackson to continue his involvement with various business interests and continue his work as an entertainer, while he pursues an orderly reorganization of his financial affairs,” his attorney William A. Brewer III said in a statement.
Jackson placed his boxing promotion company, SMS Promotions LLC, into bankruptcy on May 26, according to the New York Daily News, but the move wasn’t enough to block the payout for the lawsuit. And the rapper’s financial woes go beyond the sex-tape controversy. Last year, he was ordered to pay $16 million to a headphones company that claimed he backed out of a deal and mimicked the design when starting his own headphones brand.
By filing for bankruptcy, Jackson could potentially have his assets and personal finances scrutinized in court, Connolly says. A bankruptcy judge may have to review his spending, his earnings and his estate. The Farmington, Conn., home listed by the rapper in the bankruptcy filing reportedly has 21 bedrooms, a home theater, a fully equipped night club and basketball and tennis courts.
The recent profile in the Times listed Jackson’s various brands and successes, including his strong record sales and upcoming album, his cologne, sneaker brand and line of luxury underwear. Maybe his latest move is another sign of his “exceptional business instincts.”