Why is a Connecticut Bankruptcy Judge Picking on 50 Cent?

Rapper 50 Cent. Getty Images

Why is a Connecticut bankruptcy judge picking on 50 Cent? The poor guy just can’t catch a break, can he?

Object lesson: What happens when a successful hip hop artist files bankruptcy, and at the height of the proceedings post photos online of himself surrounded by stacks of money?

Well, it’s likely that his creditors and his bankruptcy judge will take exception and want to know if it’s real cash, who it belongs to, why where the money is coming from and if there’s even more what that came from.

This is playing out in a Connecticut bankruptcy court, which has jurisdiction over the case of rapper 50 Cent right now. Curtis Jackson III, the name his mother gave him at birth, filed a bankruptcy petition last July after the singer was ordered by a New York jury to pay an award of $7 million to a woman who claimed that he posted online a sex tape that featured her. The paperwork also shows significant losses as compared with income in 2013 and 2014 in the rapper’s various business interests. The bankruptcy filing would allow him to either eliminate the debt altogether, and if that is not possible, to renegotiate the amount or structure a payout of the debt.

It's probably not so much how much money the rapper has. There are no limits, maximums or minimums, on the assets or the debts a Chapter 11 debtor (the person or company filing the case) can have when filing a case. The question is more whether the debtor can meet his obligations, or whether he needs to renegotiate or reorganize the debt.

In all cases, however, the debtor is under a duty to be complete in his disclosures, list everything he owns or has an interest in, with an ongoing duty to update his paperwork and disclosures to ensure accuracy as of the date the case was filed. He is not necessarily under an obligation to report income that he made after the case is filed, although in a Chapter 11 case that information could be vital in gaining the support of the court and his creditors for his plan of reorganization.

 

According to the Wall Street Journal, Judge Ann Nevins expressed concern about the message the pictures could be conveying.

“I’m concerned about allegations of nondisclosure and a lack of transparency in the case,” Judge Nevins said at a hearing Thursday in Hartford, Conn.. “There’s a purpose of having a bankruptcy process be transparent, and part of that purpose is to inspire confidence in the process.” She added that bankruptcy is a place where “honest, but unfortunate” people can get a fresh start.

Wall Street Journal, Bankruptcy Beat, Feb. 19, 2016.

Mr. Jackson’s lawyer insisted to the judge that his client had listed all his income in his bankruptcy paperwork.

Even after Judge Nevins articulated her concerns in court, another photo of 50 Cent appeared on social media, this one with him sitting among piles of money, and a caption that reads: “The KANAN Tape now playing, I'm Too Rich. #EFFENVODKA #FRIGO #SMSAUDIO”

The judge has apparently not yet set a hearing for Mr. Jackson or his attorneys to appear in court to defend his decision to post the questionable pictures and explain the source of the money he so obviously enjoys posing with and showing off.

To read our original article about Mr. Jackson’s bankruptcy filing, go to:

Rapper 50 Cent Files for Chapter 11 Protection

Here are some more articles on the basics of Chapter 11 reorganization bankruptcies. 

What s Chapter 11 Bankruptcy?

Small Business Bankruptcy in Chapter 11