In my August post, I stated that it was too early to tell whether Curtis James Jackson III, better known as rapper 50 Cent (“Jackson”), would be able to come to a consensual Chapter 11 plan for repayment with creditors. Jackson has not yet filed his own proposed plan of reorganization. However, it now appears that his largest unsecured creditors Sleek Audio, LLC, Suntrust Bank and Lastonia Leviston (holding $29 million in unsecured claims) have formed an alliance (the “Proponents”) and late last week filed a joint proposed plan of reorganization (“Creditor Plan”) that may ultimately decide Jackson’s financial fate.
According to court filings, Jackson is not a proponent of the Creditor Plan and was not consulted about its terms or conditions. Whether the Creditor Plan will become a consensual Chapter 11 plan of repayment may be revealed at the February 18, 2016 hearing on approval of the Disclosure Statement for the Creditor Plan.
The Proponents suggest in their court filings that Jackson has not fully disclosed or been forthcoming about his financial affairs, including assets, debts, businesses and income. Proponents also reference pictures posted on instagram (10/14; 10/14; 11/26; 11/7; 12/3) by the Debtor which suggest he has retained material amounts of cash while at the same claiming an ongoing inability to satisfy the claims of creditors or propose a repayment plan.
Accordingly, the Creditor Plan provides that all income of Jackson from any source whatsoever be turned over to Trustee, Richard M. Coan, of New Haven Connecticut, for distribution under the Creditor Plan. Proponents propose that the Trustee take charge of all Jackson’s property, engage in a supervisory role with respect to all Jackson’s business dealings and that Jackson be prohibited from engaging in any further business activities without the Trustee’s review, consent and approval. The Trustee would further liquidate property and distribute the proceeds in a “waterfall” created under the Creditor Plan. The Proponents believe the likely outcome of the Creditor Plan would be payment of 100% of claims to creditors, with interest.
It is doubtful that Jackson will consent to the Creditor Plan with the provisions outlined above, but unfortunately for Jackson, his consent is not required for approval of a proposed plan by the Bankruptcy Court. However, as one of my learned colleagues commented…could Jackson object that these proposed Creditor Plan provisions essentially force him into indentured servitude?…there are cases that prohibit that.
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 firstname.lastname@example.org.