50 Cent Files for Bankruptcy



How is this possible? Over the past few weeks, everyone's timeline across every social media network has been flooded with news that 50 Cent filed for bankruptcy. Just earlier this year, Forbes estimated that 50 Cent was worth over 100 million dollars. So what happened? Is 50 really broke?

The Answer is Simple... No

However, 50 Cent, the person, may not be doing so well. In fact, 50 Cent recently stated that his net worth was around $4.4 million dollars, putting him in the negative when you take into account the recent string of unfavorable legal judgments that have come up against him.

So how can 50 Cent the person not be able to pay his debts while 50 Cent the business is still thriving? The answer has to do with a good lawyer that understands how liability protection works.

Liability Protection

Many people, whether from their friend who is a lawyer or a simple google search, know that forming a legal entity for their business(es) is the right course of action to take when entering the entrepreneurial stage of their lives. The reason for this is because forming a legal entity, such as a corporation or a limited liability company, provides the owner with personal liability protection. In plain English, what this means is that the owner and business are separate in the eyes of the law (I should note that this only applies if you set up and run your business properly because if you don't, the protection disappears - but we can get into this at another time). Thus when the business is in debt and being attacked by creditors trying to recoup their money, they cannot come after the business owner personally.

However, few people really think about the liability protection applying the other way around. That is, the business(es) being protected from the debts of the owner.

The Many Businesses of 50 Cent



50 Cent has a multitude of businesses (G-Unit Records, SMS Audio, SMS Productions, and Cheetah Vision just to name a few). 50 Cent has said on numerous occasions that while his companies have a habit of doing very well, he doesn't have that much money. The reason for this is due the fact that he doesn't pay himself much of a salary from his businesses. And this is totally strategic.

Every time that 50 Cent strikes a new deal (such as the recent 78 million dollar deal he signed with luxury underwear company Firgo), it isn't 50 Cent that gets a check, but rather, one of his companies.

Why Would 50 Cent Do This?

Being in the public eye can land you with a bulls-eye on your back. People assume that you are wealthy. And for some strange reason, once people start assuming that you are wealthy, a lot of people start bringing lawsuits against you. Strange right?

50 Cent knows that people think he is rich (I mean he only made a whole song where he said "have a baby by me, baby, be a millionaire"). And in the world of hip-hip where aggression is constantly pouring gasoline over fires, it is expected that 50 Cent would be sued on numerous occasions.

So when a five million dollar judgment is entered against 50 Cent the person, can that debtor attack 50 Cent the business if the person cannot pay this debt? While at times the answer may be yes, the answer most of the time (if you have a good lawyer) is no.

Is This Something Every Business Owner Should Do?

Not at all. It takes a smart lawyer to understand when a situation like 50's might be applicable to others. For most cases, it is the owner of the business that would benefit from protecting his/herself from the debts of the business. However, in situations where you are 50 Cent, it might make sense to do this.

The real answer this question is to seek competent legal counsel who understands how liability protection works and how it can be used to gain the best form of protection. Being in the public eye as a celebrity is not the only instance where a plan like this might be appropriate. It is the job of the attorney to identify when that situation is appropriate.

Wait... You Didn't Say What's Going to Happen to 50 Cent

Oh that's right. Sorry. Well 50 Cent recently filed for chapter 11 bankruptcy protection. What this means is that 50 Cent needs time to figure out how to restructure his assets in order to find a way to pay his debts (his worth is $4.4 million and owes $5 million). This takes time and can last up to two years before a plan is accepted by the court. During this time, 50 Cent is protected from his personal debtors coming after him. So for example, if someone happens to have a five million dollar law suit entered against you and you file for bankruptcy, they cannot come after you for that five million dollars. During this time, a creditor will most likely negotiate with the person that filed for bankruptcy for a lower amount thinking that it might be best to take some money now as opposed to risk not getting anything.

50 is going to be just fine.

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Julian is new to the blogging world but has started off with a bang. After graduating law school, Julian founded Music Regulation Inc., an information hub in the form of a blog relating to music law. Julian caters his blog to both entertainment attorneys and musicians by informing them of the legalities surrounding the music industry. Julian also works in the contract department of a major corporation and plans on starting his own law firm in the coming month to focus on business/corporate law, entertainment law, and intellectual property law. Julian can be reached through his Music Regulation Blog Site and by email at juliancordero88@gmail.com.

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Disclaimer: This blog post is not legal advice and is for informational purposes only. As always, you should always consult a licensed attorney when making a significant business decision.