Daily Archives: July 16, 2015

Chapter 11 Bankruptcy For Celebrities

Is Donald Trump at it again? and rapper 50 Cent joins those who have filed 50cent Chapter 11 bankruptcy

Chapter 11 bankruptcy.

Hey, how come these rich guys, or, guys that I thought,

or at least, look to me to be, rich, can file bankruptcy?

I’m glad you asked.

First of all Chapter 11 is a payment plan bankruptcy where debts are paid, at least partially.

The big boys are not filing a Chapter 7 bankruptcy, where debts are not paid.

Trump, of course, is not filing personally, just another eponymous casino reorganizing with a Chapter 11 bankruptcy.

Eponymous is a great word for, named after.

Turns out, unlike the other Trump casino Chapter 11 bankruptcy cases, Trump has NO ownership interest in this casino.

“We merely licensed our name for a fee and have nothing to do with the ownership, development or entity,” Eric Trump, executive vice president of The Trump Organization and son of Donald Trump, said in a statement.

I confess I am not up on rap music, or, for that matter, any other popular music after and including disco.

Now, why does anyone file bankruptcy?

Debt problems.

Seems a jury just whacked 50 Cent with a $5 million dollar verdict.

The filing comes days after a jury ruled that Jackson must pay $5 million to a woman suing over a sex tape that was posted without her permission, according to The Associated Press.

It is tough to file a Chapter 11 bankruptcy in a hurry, so one must assume this bankruptcy was in the planning stages as one of the options if he lost the lawsuit.

His paperwork says he is worth $10 to $50 million dollars.

Well, to be fair, that is the value of assets, without counting any liens or other debts.

It could be his legal advisers said he would be better off in Chapter 11 bankruptcy than appealing the verdict against him.

No insurance covers what the jury nailed him for.

He has not filed the complete schedules yet, which list each specific debt and asset.

Given the timing, I conclude the jury verdict inspired the bankruptcy filing, though, no telling what other debt or cash flow problems he may have.

Some folks make a lot of money, and spend more.

It is not how much or little you make that causes problems, it is the difference between your income and expenses.

 UPDATE:  Thanks to the Hon. Ray Reynolds Graves for pointing out that, in the Chapter 11 bankruptcy case of rapper 50 Cents, although the jury had come back with $5 million actual damages, they had yet to deliberate on punitive damages.  So, the bankruptcy filing stops that in its tracks, buying time to work out a settlement.  As an insurance defense attorney friend of mine says, it is usually a bad business decision to put your treasury in the hands of 7 strangers.  ( a jury)




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