Earlier this month, Curtis James Jackson III—more commonly known as 50 Cent—was successful in having a Chapter 11 repayment plan approved. The bankruptcy filing comes after a series of financial difficulties, including millions of dollars of payments associated with a court judgment and an arbitration settlement.
Jackson filed for Chapter 11 bankruptcy last year, and it has taken until just recently to have a repayment plan approved. Jackson reportedly claimed assets of $20 million and debts of $36 million. As part of the repayment plan, he is required to make an initial payment of $7.4 million and to pay between 74 and 92 percent of his debts. The money to make those payments will be coming from the sale of some of the rapper’s assets, including his Connecticut mansion, the mortgage for which is held by one of the rapper’s three biggest creditors.
A Chapter 11 filing, like Chapter 13 filing, is a reorganization form of bankruptcy. Although Chapter 11 typically involves corporations and partnerships, sole proprietors and individuals may also utilize the process for bankruptcy relief. The filing requirements are different for individuals and businesses. In any case, the court will require the debtor to provide a written disclosure statement—including a listing of assets, liabilities and business affairs—and a plan of reorganization.
Any proposed plan of reorganization must be approved by creditors whose claims are impaired, meaning those who contractual rights will be modified or who will not receive the full amount of their claims under the proposed plan. In some cases, it takes some time to work out objections to a proposed repayment plan, and having an experienced advocate is important.
We’ll continue look at this issue in our next post.
Sources: United States Courts, “Chapter 11—Bankruptcy Basics,” Accessed July 26, 2016.