|50 Cent recently celebrated his birthday at Drai’s Beachclub/Nightclub 11 stories above the Vegas Strip.|
On May 27, 2015, the Wall Street Journal reported on 50 Cent’s boxing promotion company’s recent bankruptcy filing. According to the WSJ he “is trying to use his boxing promotion company to dodge a sex-tape lawsuit.”
In 2010 Curtis James Jackson III (50 Cent), was sued by Lastonia Leviston claiming he violated her privacy by posting a sex tape of her with her boyfriend.
As Leviston’s lawyers sat in Manhattan Supreme Court awaiting the beginning of the trial, they received an e-mail stating that Jackson was now protected against litigation from the”Automatic Stay” granted to him by his company’s bankruptcy filing.
|After recent news of rapper 50 Cent’s bankruptcy filing, 20-year veteran Bruce Feinstein, Esq. weighed in on the use (and possible misuse) of the “Automatic Stay.”|
As the substantial owner of SMS Productions LLC he is protected by the automatic stay, but the use of a Chapter 11 business bankruptcy filing to skirt a personal, civil lawsuit isn’t the intended purpose of the stay.
When an individual or business files for bankruptcy protection, there is a legal protection against outside litigation that goes into effect immediately and automatically upon the bankruptcy filing.
|Is 50 Cent pimpin’ the justice system?|
This “Automatic Stay” is intended to be an injunction that halts any actions by creditors to contact a person/business for payment. And to prevent any acts of foreclosure, repossession, wage garnishment, or eviction from commencing during your bankruptcy.
This protects filers from having a creditor seize their vehicle or garnish their wages for outstanding debts while the bankruptcy court evaluates their case.
In the case of Jackson, his coincidental bankruptcy filing the morning his civil trial was to begin could be seen as an attempt to misuse the automatic stay to avoid civil litigation.
While Jackson’s lawyers are likely patting themselves on the back for their ingenuity, it seems clear the Chapter 11 filing was used as a legal tactic, and not for the financial reasons intended. I’m curious to see if the court dismisses the case outright. The automatic stay is beneficial to my clients and to bankruptcy filers everywhere, but it was certainly not intended to be used to avoid outside civil litigation.
The Law Offices of Bruce Feinstein has nearly two decades of experience in bankruptcy law, helping clients and families resolve their issues and move forward with their lives. Visit bfeinsteinesq.com for more information or call (718) 514-9770 to reach the New York office.