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Will Creditors Join Hands With 50 Cent and Sing “Kumbaya”?

Posted in Bankruptcy, Chapter 11, Creditors' Rights

It’s too early to tell whether Curtis James Jackson III, better known as rapper 50 Cent (“Jackson”), will be able to come to a consensual Chapter 11 plan for repayment with creditors.  However, based on the recent 2 hour status conference and hearings on various motions, the outlook is hopeful.  Jackson’s counsel indicated that they expect to file a consensual Chapter 11 plan of reorganization (“Plan”), or at least have narrowed the disputed issues relate to any proposed Plan, in 90-120 days.  Jackson’s professionals are currently working on projections and laying the groundwork for a meaningful conversation with creditors on a proposed repayment plan.

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In the meantime, Jackson’s counsel announced that he would soon be filing motions to employ brokers to sell Jackson’s Farmington home and Atlanta condominium.  These will be part of the money and assets used to repay creditors.  In addition, Jackson’s counsel indicated that Jackson has had a successful business history in promoting and improving the profitability of consumer brands.  Accordingly, Jackson is currently engaged in discussions for promotional agreements that will provide additional funds used to repay creditors.  It is also Jackson’s contention that he has a contribution claim against Rick Ross because Ross posted the video that is the subject of the Lastonia Leviston’s litigation first, before Jackson’s involvement.  This contribution claim may make additional funds available for distribution to creditors.  Jackson’s counsel indicated that his Plan will likely be for a term of 5 years.

With respect to the hearings set on Lastonia Leviston’s request to take the Rule 2004 Examination of Jackson and GSO Business Management, LLC (through Michael Oppenheim), the parties are going to work on a consensual order which provides that there will be one examination for each examinee where major creditors will be able to ask questions.  Jackson’s counsel said that Jackson is generally willing to provide financial information to creditors over the next 60 days.  The parties are attempting to negotiate issues related to the governing process for the examination, including the timing and scope of the examination. Similarly, the parties have agreed to work on consensual orders approving the employment of Jackson’s professionals.  If the parties are not able to come to a consensual agreement, they will seek further intervention from the Bankruptcy Court.

Will Jackson and the creditors be holding hands and singing “Kumbaya” over a consensual Chapter 11 Plan in 90-120 days?  We shall see how the case unfolds over the next 90 days and where things stand after the next status conference scheduled for September 18th.

Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP.  Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation.  You can contact Heather at 561-804-4419 or hries@foxrothschild.com.

Plan B, Plan C and Plan D – Three Petitions Circulating to Legalize Recreational Marijuana

Posted in Labor & Employment

In addition to the second round of efforts to pass medical marijuana in Florida, now there are three petitions circulating to legalize recreational marijuana.

The Florida Cannabis Act includes the following language meant to provide insulation to employers with drug free workplace policies:  “Nothing in this section is intended to require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale, or growing of cannabis in the workplace or to affect or repeal the ability of employers to have policies restricting the use of cannabis by employees.”  While this language would appear to protect employers, Florida employers can expect that interpretation of these types of provisions (assuming any of these efforts pass and become law) will include requests for accommodation (under the ADA) and litigation involving whether or not Florida employers can subject employees to termination for off-duty drug use.

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The Colorado Supreme Court recently ruled against a paraplegic employee who used medical marijuana off-duty but was subsequently terminated for violation of the employer’s drug free workplace policy.   In that case, not withstanding the fact that both medical marijuana AND recreational marijuana are legal in Colorado, the Court found that employees can still be fired for violation of a drug free policy because marijuana remains illegal in the eyes of the federal government.  The Colorado decision is really the first case to analyze an employers ability to enforce a drug free workplace policy in a state where marijuana is legal.  Further litigation on this issue is expected as more states adopt medical and recreational marijuana laws.

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Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

50 Cent Bankruptcy – Case of Controversy?

Posted in Bankruptcy, Chapter 11, Creditors' Rights, Dischargeability

I recently provided insight into some of the issues in the 50 Cent Bankruptcy Case.  You can read the article here.


Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP.  Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation.  You can contact Heather at 561-804-4419 or hries@foxrothschild.com.

Osceola County Passes Human Rights Ordinance

Posted in Labor & Employment

Following up on my post from August 5, 2015 , Osceola County, Florida will become the latest county in Florida to prohibit discrimination against gay and transgender people after the Osceola County Commission unanimously voted to adopt a new “Human Rights” ordinance.

The new ordinance does provide a carve out for religious organizations, institutions and lodge halls.————————–

Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

One County at a Time – Osceola County Moves Towards Human Rights Ordinance

Posted in Labor & Employment

The County Commission of Osceola County, Florida voted recently to move forward with a public hearing on a new human rights ordinance.

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Other Florida counties that have adopted human rights ordinances include:  Alachua, Broward, Leon, Hillsborough, Miami-Dade, Monroe, Orange, Palm Beach and Pinellas and Volusia.  Many cities and towns also have adopted human-rights ordinances.

Miami-Dade County, in December 2014, amended its human rights ordinance to add protections for citizens based on gender identity.

Guidance for Employers

Even though Title VII of the Civil Rights Act and the Florida Civil Rights Act may not specifically provide protection for sexual orientation, gender identity, etc. employers need to be aware that they are also governed by county and local ordinances that may provide protections for employees claiming discrimination based on sexual orientation, gender identity or transgender status.

See my earlier posts on this topic:

EEOC Orientates Towards Sexual Orientation Protection

Three in a Row – the EEOC Has Just Filed a Third Lawsuit Directed to Discrimination of a Transgender Employee

Potty Police: OSHA Issues Transgender Bathroom Access Guidance

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Dori K. Stibolt is an attorney with the law firm of Fox Rothschild LLP.  Dori defends and counsels management in labor and employment litigation matters pertaining to wage and overtime claims, discrimination, harassment, retaliation, leave/restraint, and whistle-blower claims.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

Schedules and a Fishing Expedition for 50 Cent?

Posted in Bankruptcy, Chapter 11, Creditors' Rights

As mentioned in my prior post, debtors in bankruptcy are required to complete and file Schedules which list all of their assets and all of their debts, along with a statement of financial affairs (“SOFA”) listing other important financial information, all under penalty of perjury.  Curtis James Jackson, III (“50 Cent” or “Debtor”) filed his Schedules and SOFA yesterday (Docket Entries 53, 54, 55, and 56).  These filings are available through the Court’s PACER website.

According to the Debtor’s Schedules, he has assets with a value of $24,823,899.18 including: $9,286,000.00 in real property, with mortgages of only $1,021,622.10; checking and/or brokerage accounts with a value of $10,554,486.13; stock and interest in businesses with a book value of $4,412,712.24; automobiles and other vehicles with a value of $500,618.00; and, household goods and furnishings, wearing apparel, furs and jewelry – in an amount to be determined by appraisal.

The Debtor’s Schedules also reveal that he has debts of $32,509,549.91 including priority and non-priority, unsecured claims by: Sleek Audio, LLC related to an arbitration award in the amount of $18,428,257.00 (disputed); Lastonia Leviston (“Leviston”) related to a jury award for $7,000,000.00 (disputed); Suntrust Bank for a guaranty in the amount of $4,000,000.00; various law firms for legal fees over $980,000.00 (some disputed); American Express for credit card debt in the amount of $64,909.04; and Daphne Narvaez for child support payments, until child reaches age of 18 years old, in the amount of $832,600.00.

The Debtor has reported that he has an estimated monthly income of $184,969.58 and estimated monthly expenses are $108,000.

fishing

Leviston has filed a motion seeking to take the Rule 2004 Examination of the Debtor (Docket Entry 45) and the hearing on that motion is currently scheduled for August 26th.  Federal Rule of Bankruptcy Procedure 2004 provides that the court may order the examination of a debtor (or any entity) on motion of any party in interest.

Often referred to as a fishing expedition, a Rule 2004 Examination (“Deposition”) is deposition, that allows the party in interest to ask questions about “the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor’s estate, or to the debtor’s right to a discharge,” under oath.  The Deposition typically lasts a couple of hours but, could be longer and continue for days depending on the complexity of a debtor’s financial affairs.  The answers to questions asked at the Deposition can be used for many purposes, including (but not limited to): assessing a debtor’s financial condition and ability to reorganize his debts; locating assets that may have been transferred by a debtor and subject to recovery; and/or obtaining evidence for prosecution of an adversary proceeding objecting to discharge or dischargeability of certain debts.

Will there be a fishing expedition for 50 Cent and will the discovery be bountiful for Leviston?


Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP.  Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation.  You can contact Heather at 561-804-4419 or hries@foxrothschild.com.

Are Dischargeability Contests Looming in 50 Cent Bankruptcy?

Posted in Bankruptcy, Chapter 11, Creditors' Rights, Dischargeability, Uncategorized

As mentioned in an earlier post, the current deadline to object to dischargeability of certain debts in Curtis James Jackson, III’s bankruptcy (“50 Cent” or “Debtor”) pursuant to 11 U.S.C. 523 is October 5, 2015.

The filing of a Chapter 11 bankruptcy case does not automatically result in the discharge of the debts owed by the individual debtor for various reasons.  Certain claims against a debtor are “non-dischargeable”.  This means that the debt cannot be eliminated by bankruptcy process and the debtor will still owe these debts after his/her bankruptcy.

lightening pig

There are several categories of non-dischargeable debt for individuals in Chapter 11 and it is essential for creditors to know the nature of their claim against the debtor.  These categories fall into two types of non-dischargeable claims: 1) claims that are exempt from discharge as a matter of law (i.e. student loans, criminal fines, certain taxes); and 2) claims which require a creditor to file an adversary proceeding in the debtor’s bankruptcy case for determination by the Bankruptcy Court that the claim is non-dischargeable.  If a creditor fails to timely file an adversary proceeding by the Court scheduled deadline in a bankruptcy case, a discharge awarded to the debtor will also discharge the potentially non-dischargeable debt.

One category of claims that requires a creditor to file an adversary proceeding for determination of non-dischargeability, is for a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity” pursuant to 11 U.S.C. § 523(a)(6).

Recent news articles about 50 Cent’s bankruptcy filing have focused on the New York jury verdicts for $5 million for compensatory damages and $2 million for punitive damages (“NY Litigation Debt”) in favor of Lastonia Levitson (“Levitson”).  Levitson sued the Debtor for intentional infliction of emotional distress and violation of the New York Civil Rights Law related to Jackson’s release of a private, intimate video depicting Levitson having sex with her then boyfriend.

An interesting issue in 50 Cent’s bankruptcy case will be whether he can prevail against (or settle) any adversary proceeding by Leviston for determination that the NY Litigation Debt is non-dischargeable.  The NY Litigation Debt,  in part, was based on a finding that 50 Cent was liable to Leviston under her cause of action for intentional infliction of emotional distress.

The elements of a cause of action for the intentional infliction of emotional distress are: “(i) extreme and outrageous conduct; (ii) intent to cause, or disregard of a substantial probability of causing, severe emotional distress; (iii) a causal connection between the conduct and the injury; and (iv) severe emotional distress” (Howell v. New York Post Co., 81 N.Y.2d 115, 121 [1993] ).

Several courts have found that a claim for intentional infliction of emotional distress satisfies the “willful and malicious injury” standard under 11 U.S.C. § 523(a)(6), supporting non-dischargeability of these types of claims.  See e.g. Mussilli v. Droomers (In re Musilli), 379 Fed.Appx. 494, 498 (6th Cir. 2010) (“This Court has created a non-exclusive list of the ‘types of misconduct [that] satisfy the willful and malicious injury standard: intentional infliction of emotional distress…’ “); Berrien v. Van Vuuren (In re Berrien), 280 Fed.Appx 762, 766 (10th Cir. 2008)(intentional infliction of emotional distress claim satisfies the “willful and malicious injury” standard).  Collier on Bankruptcy § 523.12[4] (16th ed. 2012) (“Claims based on…intentional infliction of emotional distress…have typically been held nondischargeable”).

Perhaps some of these issues will be raised at the status hearing to be held in the Debtor’s bankruptcy case on August 26, 2015 at 2:00 p.m. 


Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP.  Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation.  You can contact Heather at 561-804-4419 or hries@foxrothschild.com.

Suing Consumer Bureaus: Business Does Not Have to Be Consumer to Sue under Florida Deceptive and Unfair Trade Practices Act.

Posted in Uncategorized

In a related post, I recently addressed Florida’s Fourth District Court of Appeal’s decision in Caribbean Cruise Line, Inc. v. Better Business Bureau of Palm Beach County, Inc. d/b/a Better Business Bureau of Southeast Florida and the Caribbean, Case No. 4D13-3916. For those involved in consumer bureau litigation, the most exciting part of the Court’s opinion was obviously the Court’s holding that a local Better Business Bureau (“BBB”)  affiliate was not protected by First Amendment privilege when a claim concerns the BBB’s methods, business conduct, or representations. However, the Court also shed some new light on Florida’s Deceptive and Unfair Trade Practices Act (“FDUTPA”).

As a matter of background, the Florida legislature amended FDUTPA in 2001 by changing the definition of who could bring a FDUTPA action from a “consumer” to a “person.” While it may seem obvious that the amendment signaled an intention to expand access to FDUTPA actions, sparse Florida case law on FDUTPA created some confusion. Often times, trial courts, such as the one in Caribbean Cruise, erroneously continued to require consumer status for a claimant bringing a FDUTPA action based on the Fourth District’s opinion in Beacon Prop. Mgmt., Inc. v. PNR, Inc., 890 So. 2d 274, 278 (Fla. 4th DCA 2004).

Fortunately, the Fourth District has added some clarity to the issue. In the second portion of the Court’s opinion in Caribbean Cruise, the Court held that the 2001 amendment indicated that “the legislature no longer intended FDUTPA to apply only to consumers, but to other entities able to prove the remaining elements of the claim.” The Court stated:

[W]hile the claimant would have to prove that there was an injury or detriment to consumers in order to satisfy all of the elements of a FDUTPA claim, the claimant does not have to be a consumer to bring the claim.

After Caribbean Cruise, FDUTPA claims seem to be available to businesses in B2B transactions as long as the claimant can show some potential harm to consumers resulting from the unfair or deceptive trade practice. More specifically, however, the Court was unequivocally clear that FDUTPA claims are available to businesses in litigation against consumer bureaus like the BBB where the claimant alleges that the bureau is acting in a biased or partial way even though the bureau makes representations that it acts impartially or without bias. In this sense, the Fourth District opened the door to lawsuits in connection with representations that consumer bureaus make about themselves as opposed to their constitutionally protected opinions about a particular business.

Caribbean Cruise is certainly a sign of hope for practitioners and businesses aggrieved by a consumer bureau like a local BBB. However, in order take advantage of Caribbean Cruise and bring a claim against a consumer bureau like a local BBB, businesses and their attorneys will need to develop a sound strategy well in advance of filing suit and be extremely meticulous in pleading their causes of action so as to overcome defenses of constitutional protection in the bureau’s motion to dismiss.

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W Mason is an associate with the law firm Fox Rothschild LLP. W practices in Fox Rothschild’s Litigation department in West Palm Beach, Florida. W focuses his practice on commercial litigation throughout Florida, with an emphasis on litigation involving consumer bureaus including the Better Business Bureau. You can reach W at (561) 804-4432 or wmason@foxrothschild.com.

50 Cent – Lavish Lifestyle or Drowning in Litigation Debt?

Posted in Bankruptcy, Chapter 11, Creditors' Rights

According to recent filings, the Curtis James Jackson, III (“50 Cent” or “Debtor”) has 1-49 creditors, $10,000,001 to $50 million in Assets, and estimated liabilities of $10,000,001 to $50 million. Listed among the 20 largest creditors are Sleek Audio, LLC, Lastonia Leviston, Suntrust Bank, 8X10 Boutique LLC, Premium Assignment Corp. and American Express.  The Debtor has indicated in papers filed with the Bankruptcy Court in Connecticut that his bankruptcy filing “is not primarily a result of excessive current expenses exceeding his current revenues, but rather the substantial costs of litigation and resulting awards against in the past year which total in excess of $20 million” and that while he has “substantial assets, he does not have the ability to pay the full amount of these litigation claims and all other asserted claims at the present time, thereby necessitating this chapter 11 filing.”

drowning pig

Debtors in bankruptcy are required to complete and file Schedules which list all of their assets and all of their debts, along with a statement of financial affairs (“SOFA”) listing other important financial information.  50 Cent must sign the Schedules and SOFA, declaring under penalty of perjury that the information provided in those documents is true and correct.  While a debtor’s bankruptcy Schedules and SOFA are generally due within 14 days from the bankruptcy filing, 50 Cent has sought by motion to extend that deadline to August 3, 2015 (Docket Entry 30).  Requests for extension are not uncommon, especially where the debtor runs his business through several entities and there is a large volume of information to be included in the Schedules and SOFA.

Once filed, the Schedules and SOFA should provide creditors and parties in interest a good picture of where 50 Cent’s financial life stands.  Is he a victim of his own lavish lifestyle or drowning in litigation debt?


 

Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP.  Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation.  You can contact Heather at 561-804-4419 or hries@foxrothschild.com.

50 Cent Proposes Bankruptcy Professionals

Posted in Bankruptcy, Chapter 11

This week, Curtis James Jackson, III (“50 Cent” or “Debtor”) sought to employ several professionals to assist him with his chapter 11 bankruptcy.  The Debtor is seeking to employ two firms as his bankruptcy counsel:

  • Neligan Foley LLP (“NFL”) – 50 Cent wishes to employ NFL as his bankruptcy counsel (Docket Entry 34) to develop, propose, and consummate a plan of reorganization or liquidation, along with customary bankruptcy professional services.  The Debtor proposes to pay NFL their customary hourly rate for services rendered, ranging from $395 to $675 per hour for NFL partners and $130-$350 for NFL paralegals and associate attorneys.
  • Zeisler & Zeisler, P.C. (“ZZP”) – The Debtor also seeks to employ ZZP as bankruptcy counsel (Docket Entry 40), the same firm representing SMS Promotions, LLC (“SMS”) (50 Cent is the manager and sole owner) in its chapter 11 bankruptcy.  The Debtor proposes to pay ZZP their customary hourly rate for services rendered, ranging from $395 to $475 per hour for ZZP partners and $175-$375 for ZZP paralegals and associate attorneys.

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The Debtor further seeks to employ a financial advisor/accounting firm and litigation and intellectual property counsel:

  • GSO Business Management, LLC (“GSO”) – In his application to employ GSO (Docket Entry 27), 50 Cent indicates that his “bankruptcy filing is not primarily a result of excessive current expenses exceeding his current revenues, but rather the substantial costs of litigation and resulting awards against him the past year which exceed in excess of $20 million.”   GSO performed financial advisory and accounting services for 50 Cent and all his related entities prior to the bankruptcy filing and he seeks to continue to employ them post-bankruptcy filing in that role and, among other services, to assist him with negotiations with creditors and other parties in interest, preparation of bankruptcy schedules and his statement of financial affairs, preparation of monthly operating reports, and analysis of financial data necessary to obtain confirmation of the a plan or reorganization/liquidation or consummation of a settlement.  50 Cent proposes that GSO will be paid $30,000 by G-Unit Records, Inc. for financial and accounting services and hourly by the Debtor for litigation support and testimony services.
  • Robins Kaplan LLP (“RKL”) – RKL (Docket Entry 32) will  to continue to represent the Debtor going forward with trademark maintenance and protection and  several litigation matters RKL was handling prior to the bankruptcy filing, including litigation between 50 Cent and/or his businesses with Sleek Audio, Lastonia Leviston, Andrew Jameson.  50 Cent proposes that RKL be paid pursuant to their pre-bankruptcy engagement letters, except for certain fee caps and fee reductions as outlined in the application.

So far, there has not been any opposition to the employment of these professionals.