The rapper, Curtis James Jackson III, popularly known as 50 Cent, had filed a petition for a Chapter 11 bankruptcy in a bankruptcy court of Connecticut. The value of his total assets was shown to be between $10 million and $50 million, in the documents. But, one thing that makes 50 Cent’s bankruptcy case unique is that he had filed for Chapter 11 bankruptcy instead of Chapter 13 bankruptcy.
So, what does exactly happen in Chapter 11 bankruptcy? In a Chapter 11 bankruptcy, small businesses, filing for bankruptcy, get an opportunity to restructure their business-related finances by following a repayment plan which is approved by the court. Many large businesses such as Carmike Cinemas and General Motors had also opted for a Chapter 11 bankruptcy. Normally, the repayment plan in a Chapter 11 bankruptcy allows the debtor to continue operating as a business even during the case, strike a balance between the income and expenses, and also regain profitability.
A business will be able to get its debts discharged, only if, it follows all the rules and requirements of the court of bankruptcy. Even small business debtors (a person or an entity) can file for Chapter 11 bankruptcy. But, they will have to fulfill these two eligibilities to file for a Chapter 11 bankruptcy:
- It is involved in a business or other commercial activities.
- It does not owe total claims of more than $2,490,925.
Individuals, who are unable to file for a Chapter 7 bankruptcy, are required to file for a Chapter 11 bankruptcy instead of a Chapter 13 bankruptcy if they have unsecured debt of more than $336,900 or secured debt of more than $1,010,650. The main difference between a Chapter 13 repayment plan and a Chapter 11 repayment plan is that a Chapter 13 plan varies between 3 to 5 years, but a Chapter 11 plan has to be 5 years long.
The bankruptcy petition of 50 Cent did not clearly mention the reason for him to file for a Chapter 11 bankruptcy despite having an estimated $50 million worth of assets. To learn more about the benefits of a Chapter 11 bankruptcy filing, contact the best bankruptcy lawyers of Los Angeles & Dallas, TX, the Recovery Law Group. You can visit Recovery Law Group or call on 888-297-6203.