Music catalogs and loans

Michael Jackson purchased ownership in ATV Music Publishing in 1985, which owns the publishing rights to songs written by The Beatles and many other acts. Paul McCartney of The Beatles, who had also recorded with Jackson, was reportedly angered by the 'surprise' purchase, and this led to the two becoming estranged.

In 1995, Jackson and Sony Music Publishing merged their two catalogues to create, Sony-ATV. Jackson's 50% interest in the company (Sony Music Entertainment owns the other half) is estimated to be worth USD $500 million. Jackson also owns his own music catalogue called MiJac Publishing, which contains all of his songs and songs from Sly & the Family Stone.^[1]

Over the past 10 years, Jackson has secured two loans for USD $200 million and USD $70 million. The USD $200 million loan was secured by using Jackson's share of the Sony-ATV Catalogue as collateral. He later secured the USD $70 million loan by using his MiJac Catalogue as collateral. However, because of his declining sales, his MiJac Catalogue's value declined to under USD $100 million, therefore he was forced to use his Neverland Ranch and Hayvenhurst as added collateral to keep the loan.

In April 2005, the Bank of America sold the loan to Fortress Investments. Jackson continued to miss payments on the loan, and as of December 20, 2005, Fortress had the right to foreclose on the loan, allowing Sony Music the first right to buy Jackson's share of the loan. However, Fortress extended the loan, allowing Jackson time to get money together.

In a move named by Jackson's advisors as "refinancing," it was announced on April 14, 2006 that Jackson had struck a deal with Sony and Fortress Investments. In the deal Sony may be allowed to take control of half of Jackson's 50% stake in Sony/ATV Music Publishing (worth an estimated $1 billion) which Jackson co-owns. Jackson would be left with 25% of the catalogue, with the rest belonging to Sony.

In exchange, Sony negotiated with a loans company on behalf of Jackson. Jackson's $200m in loans were due in December 2005 and were secured on the catalogue. Jackson failed to pay and the Bank of America sold them to Fortress Investments, a company dealing in distressed loans. However, Jackson has not as yet sold any of the remainder of his stake. The possible purchase by Sony of 25% of Sony/ATV Music Publishing is a conditional option; it is assumed the singer will try to avoid having to sell part of the catalogue of songs including material by other artists such as Bob Dylan and Destiny's Child. As another part of the deal Jackson was given a new $300 million loan, and a lower interest rate on the old loan to match the original Bank of America rate. When the loan was sold to Fortress Investments they increased the interest rate to 20%.^[2] None of the details are officially confirmed. An advisor to Jackson, however, did publicly announce he had "restructured his finances with the assistance of Sony."^[3]

Michael Jackson owes a $5 million interest payment to Fortress Trust, the publicly traded hedge fund that bought his $272 million loan from Bank of America in April 2005 (the loan has been refinanced to $325 million by Fortress). The payment is due on Oct. 31, 2007.^[4]

Neverland Ranch employees

On March 9, 2006, California state labor officials closed the singer's Neverland Ranch and fined him $69,000 for failure to provide employment insurance. The state "stop order" bars Jackson from "using any employee labor" until he secured required workers' compensation insurance. In addition to being fined $1,000 for each of his 69 workers, Jackson is liable for up to 10 days pay for those employees who now are no longer allowed to report to Neverland for work.^[5] Thirty Neverland employees have also sued Jackson for $306,000 in unpaid wages.^[6]

Soon after this payment, Jackson's spokesperson announced on March 16 2006 that Jackson was closing his house at Neverland and had laid off some of the employees but added that reports of the closing of the entire ranch were inaccurate.^[7] There have been many reports of a possible sale of Neverland, but nothing tangible has been reported yet.

F. Marc Schaffel

In 2006, F. Marc Schaffel, a former associate of Jackson, filed a suit for millions of dollars allegedly owed to him after working with Jackson on an unreleased charity record named "What More Can I Give" and documentaries. Florida businessman Alvin Malnik, who had advised Jackson, appeared in court and stated that Jackson appeared to be bewildered by financial matters. Schaffel claimed to have made frequent loans to the singer totaling between $7 million and $10 million. He also claimed to have received an urgent plea from Jackson for $1 million so that Jackson could buy jewelry for Elizabeth Taylor so that she would agree to sign a release for her involvement in a Fox special.^[8]

On July 14 2006, the jury awarded Schaffel $900,000 of the original $3.8 million he sued Jackson for, which Schaffel later reduced to $1.6 million, and finally to $1.4 million.^[9] The jury also awarded Jackson $2,000 plus interest of the $660,000 that Jackson claimed he was owed by Schaffel. The trial revealed that Schaffel had been dismissed after Jackson learned of his past work as a director of gay pornography. Schaffel claimed that Jackson "once wanted him to go to Brazil to find boys for him to adopt. He later modified that statement to "children" to expand Jackson's family."^[10] Jackson's lawyer Thomas Mundell said that he had never heard the allegation during the pre-trial investigation and that "it was an effort to smear Mr Jackson with a remark that could be interpreted to hurt him in light of the case against him last year."^[11]

Prescient Acquisition Group

On July 31 2006, a federal judge allowed a $48 million claim against Jackson and one of Jackson's trusts (MJ Publishing Trust) for unpaid fees and breach of contract. Prescient Acquisition Group claimed the singer owed fees for the company's help in refinancing his debts and claiming a larger stake in a library of Beatles songs. All parties were ordered to reappear in court in September.^[12]

Lavely & Singer

In 2007 the high-profile L.A. firm Lavely & Singer sued Jackson in August to try and recoup what it says is more than $113,000 in unpaid fees. ^[13]

Prince Abdulla Al-Khalifa of Bahrain

On October 15 2007, Prince Abdulla Al-Khalifa of Bahrain has filed a 7 million dollar lawsuit against Michael Jackson in the court of London for reneging on a contract to record two albums, write and produce a live Broadway kind of show featuring Jackson's music, and to write and publish an autobiography. The prince could tie up Jackson's ability to perform or work until 2012, if he chooses to press the issue, but according to the prince, it would appear that Jackson has left Bahrain with NO intention of coming back what so ever, which is why he filed the lawsuit. ^[14]

Ayscough & Marar awarded $175,000

On October 15 2007 A judge on Monday ordered the singer to pay $175,000 in overdue attorneys' fees to a law firm that sued the pop singer. Superior Court Judge James Chalfant's order means Jackson's legal bill to the firm, Ayscough & Marar, now totals more than $430,000. The firm sued Jackson in February 2006, claiming he didn't pay for services it rendered on his behalf.

The firm said it had obtained court orders to delay discovery in civil cases and kept information from being released during the singer's 2005 child molestation trial, according to the lawsuit.

In July, Chalfant said Jackson would have to pay the law firm $256,000 for unpaid fees. Jackson's attorneys have appealed that judgment.

Monday's award compensates the law firm for having to hire a lawyer to sue Jackson. The firm had asked for nearly $450,000.^[15]

Brian Oxman

Michael Jackson’s East Coast attorneys also have settled another case, brought by attorney Brian Oxman, self-appointed Jackson family spokesman, for about $1 million. Of course, settled doesn’t mean collected. All of these come under the heading of accounts payable. ^[16]

Michael Jackson Defaults on 23 Million Dollar Loan

Michael Jackson has defaulted on a $23 million loan and the holder has put him on notice. Jackson has 90 days to pay the full amount — $23 million plus $212,963.83 in interest — or he will lose his Neverland Ranch.

The papers filed are titled “Notice of Default and Election to Sell.” No amount of wishing by Jackson fans or spin from his much-diminished team can change what they mean. Jackson’s financial house of cards is finally falling in.^[17]

Michael Jackson closer to losing Neverland

Sources indicate that the refinancing of Jackson’s $300 million loan with Fortress Investment Group is getting closer, mostly thanks to the participation of Jackson’s primary business partner, Sony ATV Music Publishing. If a deal can be worked out, Barclay’s Bank would buy the loan from Fortress.

On the other hand, Sony, will not be getting involved in a separate loan Fortress made to Jackson for Neverland. That loan, under a Fortress entity called DBGC, is secured by Neverland for $23 million. On Oct. 22, as first reported, Jackson defaulted on that loan. He has 90 days to pay the full amount or lose the property. The clock runs out for him on Jan. 19.

If Jackson doesn’t pay Fortress, Neverland would be sold at auction to the highest bidder. Of course, that bidder would have to deal with any other liens against the property. One known lien is being held by Marc Schaffel, Jackson’s former business partner.^[18]

Michael Jackson closer to being broke

Pop superstar Michael Jackson has been depending on the kindness of friends to provide him and his children shelter after being sent out of places he rented in Las Vegas and Washington.

Pagesix.com reports that Jackson, who is nearly broke and about to lose his Neverland Ranch, had to spend last week at the Beverly Hills home of his good friend Ron Burkle.

"The whole family has been hiding out. They were holed up in Burkle's place behind the Beverly Hills Hotel. They even refused to come out of their rooms and hid when Burkle had guests over," said a source.

Jackson is at default on a $23 million loan against his ranch and is on the verge of losing his entire fortune. Before he decided to shack up with Burkle, the singer was living in a private home in New Jersey.^[19]

Bail Bondsman looking for Jackson

On Monday, a California bail bondsman named Richard Hopp filed a request for Notice of Default in Santa Barbara County against Jackson.

The notice falls under California Civil Code 2924b. It means that the bail bondsman wants to know about the status of the $23 million lien on Jackson's only real asset, Neverland Ranch.

This could mean a lot of things, including: Jackson needs his Neverland Ranch to secure or pay off a bail bond for some reason. Or it could mean nothing. But in Jackson’s world, the possibilities are endless and nothing is surprising.

Jackson’s legal woes are mounting — his lawyer, Thomas Mundell, goes into court on Friday begging the judge in a lawsuit not to make Jackson pay up $3.8 million. It’s really sad.

In a public filing with Los Angeles Superior Court, Judge Joseph Biderman presiding, Mundell writes: "it was clearly understood by the parties that Mr. Jackson did not have the cash available to make the settlement payment at the time the settlement agreement was signed.^[20]

Jackson Land Default: New Problem

Michael Jackson is in default on a $23 million loan secured by his Neverland Ranch. He will go into foreclosure on or around Jan. 19 if he doesn’t pay the full amount of the loan to New York’s Fortress Investments, the first publicly traded hedge fund.

So far, no payments have been made and Jackson remains in default.

Now, according to the Los Angeles County Treasurer and Tax Collector, there’s more trouble. Jackson is in tax default on his parents’ home in Encino, Calif. The house was on the county’s defaulted tax roll as of Wednesday.

If someone doesn’t pay the county $16,293.10 by this Monday, there’s going to be trouble with the county. Jackson has a $4 million mortgage on the property where his parents and various family members alight from time to time. ^[21]

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