The not-so-secret $600 million sale of Michael JacksonMusic assets of industry giant Sony were the subject of a heated hearing Friday in a Los Angeles courtroom, with attorneys for Catherine Jackson arguing that co-executors John Branca and John McClain should be held “in contempt” for entering into the transaction while she still appeals a ruling on the case.
The tempting sale, first reported by Billboard and confirmed Friday by rolling stone, was negotiated by the executors to take advantage of an asset market that was “by far” the “hottest it has ever been,” says a recent appeal brief filed by the estate. The pact would allegedly allow the estate to maintain “effective control over Michael’s music” while diversifying its range of assets, the filing says.
Although the exact terms of the deal remain sealed, the estate retains control over “all critical decisions relating to the exploitation of Michael's name, likeness and rights, in order to protect and preserve his legacy.” , indicates the succession. It will also “continue to exercise day-to-day control over the merchandising and monetization of trademarks and related rights,” the recent appeal brief reveals.
On Friday, a lawyer for Katherine said he believed the agreement, which closed in recent monthsrepresents a violation of court orders as Katherine's appeal against an earlier decision on the transaction is still pending.
“On March 1, I sent a letter to the estate requesting an explanation of the authority they were relying on to proceed with the transaction, and – crickets. No response at all. We do not understand why this is not in contempt of this court,” said attorney Robert E. Allen. He proposed setting a hearing date to consider the case of contempt of co-executor John Branca.
But Los Angeles County Superior Court Judge Mitchell Beckloff, who has overseen Michael Jackson's estate since his death in 2009, said the executors had the authority to conclude the deal. He said it was true that Katherine's call meant her “blessing” of the deal had been suspended, but he said the executors were free to move forward knowing they would be “personally liable” if their actions led to prosecution.
“I did not stop them from completing the transaction,” the judge said. “The estate wanted an order indicating that it could proceed with the transaction and be free from liability. They were asking for a blessing in that they would not be personally liable for the transaction if they were sued. Now they are responsible for the transaction if they are sued.
A lawyer for the estate said his camp always knew it did not need court permission to proceed, but sought such permission whenever possible. She said in this case, timing was important. “The executors have a very, very good reason to do the transaction,” probate lawyer Jeryll Cohen said, without elaborating.
In their documents, the executors say the estate was debt-ridden and on the verge of bankruptcy when Michael Jackson died. “Exercising the powers granted in Michael's will, upheld by the probate court, they entered into business transactions involving the assets of the estate that caused the value of the estate to skyrocket to more than $2 billion” , said the recent appeal brief signed by probate attorney Jonathan P. Steinsapir.
But problems remain, so the probate case is still open, meaning the trusts established for Michael's three children and his mother have not yet been funded. One issue is a tax dispute with the IRS involving more than $700 million in unpaid taxes and penalties. And Michael Jackson's companies are once again the defendants in revived the prosecution of two of his sexual assault accusers, Wade Robson and James Safechuck. The men claim the companies are responsible for the abuse they allegedly suffered as children.
On Friday, Cohen said the executors were objecting to a six-figure legal bill submitted to the estate by Katherine's lawyers. One of her lawyers said the refusal amounted to revenge against Katherine for opposing the asset deal.
“We wouldn't be here if the estate wasn't trying to punish Katherine Jackson for having the temerity to challenge her actions. If this was an attorney's fee incurred to handle another dispute, they would have paid it,” argued attorney Adam Pines of Glaser Weil. “What the executors appear to be doing is waiting until Ms. Jackson dies.”
Cohen scoffed at this claim: “Executors do not pay beneficiaries’ attorney fees. This is not about punishing Ms. Jackson. The judge, who is retiring next month, set a follow-up hearing for March 22.