Rapper 50 Cent is in the news again, and it’s not because of a new album. He is making his way back to bankruptcy court after posting several pictures of himself surrounded by piles of cash on social media.
The rapper filed for bankruptcy in July, but, according to a recent CNN article, “in court on Thursday, the judge told the rapper’s attorney: ‘I’m concerned about allegations of nondisclosure or a lack of transparency in the case.’”
Our office has previously commented on 50 Cent’s bankruptcy case and its use of the automatic stay that’s invoked upon filing. With the artist back in the news again, this case sheds light on a new issue – disclosing assets during a bankruptcy proceeding.
But first, a little history. 50 Cent claims that while he is still making money, a recent group of lawsuits is making it impossible for him to pay his debts. He placed his boxing promotions company, SMS Promotions LLC, in bankruptcy in 2015. But recently 50 Cent’s Instagram feed has shown photos of him with large amounts of cash. One image shows him in a bed swaddled in upwards of $50,000 in bills, while another shows him posing with stacks of money that spell out “BROKE.” This alleged lack of disclosure relates to all clients filing for bankruptcy, and not just high profile celebrities. It is incredibly important that all assets are disclosed in a bankruptcy filing or the client could expose him or herself to bankruptcy fraud charges.”
When filing for bankruptcy in New York, people must disclose all the assets and property they have, along with all of their debts, to the court. If they do not do this, they won’t be able to have these assets discharged in the bankruptcy proceeding. But the negative impact doesn’t stop there, and that’s what makes 50 Cent’s actions so important to share with clients. Anyone who does not disclose assets can face criminal penalties and will be unable to discharge those assets in subsequent bankruptcies.
There are a few negative outcomes that can come from nondisclosure of assets. A bankruptcy trustee has the right to revoke the person’s discharge if he or she finds hidden assets. This can happen before or after the case is closed, up to one year after the discharge date. Those hidden assets also become ineligible in future bankruptcy filings, so they become susceptible to seizure or foreclosure. There is even the chance of criminal prosecution in these cases. A person signs his or her asset listings under penalty of perjury during a bankruptcy. If he or she is not truthful in sharing this information with the court, then that person can be charged with making a false statement or concealing property, with punishments of substantial fines and jail time.
50 Cent’s actions could not only doom his Chapter 11 bankruptcy case, but also open him up to fraud charges. And with the ever-increasing involvement of social media, your personal life is no longer personal. Taking your bankruptcy proceeding seriously and being truthful throughout the entire process are your biggest allies.