Is a Kanye West Bankruptcy in the Cards?

There's an old saying that details the nature of debt surprisingly well. When you owe the bank $50,000 and can't pay, you're in trouble. When you owe the bank $50,000,000 and can't pay, the bank is in trouble. Recently, something of a bombshell dropped on the entertainment community, as rapper and entrepreneur Kanye West revealed that he was fully $54 million in debt. This prompted questions of whether or not West would file bankruptcy, and there's actually more to the story than the big number suggests.

West reportedly noted, as part of a string of Tweets, that “for the past 3 years people who knew about the debt tried to use it against me in negotiations.” He followed that up with a starkly defiant post, noting that “You can't control me or use the debt against me no more.” Whoever holds the markers on that $53 million might beg to differ, but if West meant that those “using it against (him)” wouldn't be able to use the threat of revealing the news as leverage, then that's clearly the case.

There were plenty of unanswered questions going into this, but current reports suggest that the $53 million is “personal debt” used in funding an array of business endeavors. This isn't exactly out of line to anyone who's started a business; some commit savings to the purchase of a storefront, others take out loans for the construction of business websites and so on. Others turn to debt as a means to bridge lean times of a business—most every business sees some point of soft sales or dwindling client lists at one time or another—and the amount taken on generally is based on the level of risk the owner is willing to undertake.

A person like Kanye West, therefore, might be willing to take on epic levels of risk in a bid to achieve business success, and his $53 million in debt might reflect that. So now, he's left with a massive quantity of debt, and one big question behind it: will he declare bankruptcy as a result?

Since the debt is personal in nature, he might well have taken the debt on in his own name as opposed to that of a corporate venture. This means the bankruptcy types he'd be most likely to pursue would be a Chapter 11, geared mainly toward businesses.  A Chapter 13, a bankruptcy involving a repayment plan over the course of three to five years but most likely three would actually be out of the question, as the number involved exceeds standard limits by a wide margin. A Chapter 7 bankruptcy would be possible here if unlikely; while Kanye's annual income isn't exactly a well-known fact, it's a safe bet that it would fall above the median income for the state in which he'd file. Since he also likely has an income—not to mention the fact that his wife, Kim Kardashian, likely also has an income thanks to various ventures which would fall into consideration during bankruptcy proceedings—it renders Chapter 7 a long shot.

Naturally, this is speculation; there's no way to know if Kanye will be filing a bankruptcy or not. Some reports suggest that he may be in a position to make some repayment thanks to some help from Adidas, who's serving as a distribution network for things like his Yeezy Boost 350 shoes. Time will tell just what the case is for Kanye, but we likely haven't heard the last of him either way.