A court-ordered auction of Damon Dash’s one-third stake in Jay-Z’s Roc-A-Fella Records has been postponed for at least three weeks, court documents show, and the minimum price for the sale will be more than doubled to help cover Dash’s massive unpaid tax and child support debts.
The auction – in which the U.S. Marshals Service will sell off Dash’s 33.3% interest in the storied record company – had been set to be held Thursday. But in an order Tuesday, a federal judge granted a motion to extend the deadline for the event to Sept. 21.
The delay will give more time to sort out who will get paid first from the proceeds. The auction was originally intended to pay off an $823,000 judgment against Dash won by movie producer Josh Webber in a civil lawsuit over a failed film partnership. But New York City has jumped into the case to demand more than $193,000 in unpaid child support, and New York state later claimed that the auction must also help pay down more than $8.7 million Dash owes in back taxes.
In a court filing on Monday, Webber’s attorney Chris Brown alerted the judge that he had reached an agreement with New York City and New York state to sort out a pecking order for the proceeds, but he also asked to push back the auction; it was that request that was granted by the judge on Tuesday.
Under the agreement, the minimum bid for Dash’s stake will be increased from $1.2 million to $3 million. New York City will get first dibs at that money, taking at least $193,000 to cover the money Dash owes in child support. That will be followed by $1.7 million going to the state to cover part of the massive tax bill, followed by the original $823,000 in legal damages owed to Webber. After other civil litigants are paid smaller sums, the remainder of the tax bill – roughly $7 million – will be paid to New York state. If anything is left, it will go to Dash himself.
Other issues remain to be ironed out. New York City is still seeking an additional deposit of nearly $70,000 more from Dash to cover ongoing child support payments in the future, and wants any payouts from the auction paused until a judge decides the issue. Brown has opposed that motion, and a hearing before the judge to decide the issue is set for next month.
Dash himself was not involved in the deal. In court filings, his attorney Natraj Bhushan said his client was “not privy to these discussions, had no input on the same, and disagrees with the priority given.” In a statement to Billboard on Wednesday, he said the pecking order had yet to be finalized.
“We look forward to upcoming court conference so that all interested parties can be heard and the court can decide who gets what, and in what priority from the forthcoming public auction,” Bhushan said.
Brown declined to comment on Wednesday. Attorneys for New York City and New York state did not immediately return requests for comment.
Whenever it happens, the auction will be for Dash’s stake in Roc-A-Fella Inc., an entity whose primary asset is Jay-Z’s iconic debut album Reasonable Doubt. The rest of the catalog of music released by Roc-A-Fella, which dissolved as an active label in 2013, isn’t involved.
The owners of the other two-thirds of Roc-A-Fella — label cofounders Jay-Z (Shawn Carter) and Kareem “Biggs” Burke — have already attempted to stop the auction, including making changes to the company’s bylaws and intervening in the lawsuit. But a federal judge rejected such opposition in February.
Though the auction’s minimum bid has now been increased, it’s entirely unclear how much a potential buyer is going to be willing to spend on Dash’s one-third stake.
The royalties from Reasonable Doubt would likely provide them a revenue stream; since its 1996 release, Reasonable Doubt has racked up 2.2 million equivalent album units in the U.S., according to Luminate, including 21,500 units so far this year. But the eventual buyer also would be a minority owner in a company controlled by hostile partners, with little ability to perform typical due diligence on the asset they’re about to purchase. And Roc-A-Fella’s rights to Reasonable Doubt will potentially expire in 2031 thanks to copyright law’s termination right, which would allow Jay-Z himself to reclaim full control.
