According to public documents, rapper Ye deals with six-figure debt from selling his well-known, internationally recognized Yeezy clothing line.
The artist constantly kept the audience informed of his many financial difficulties. For instance, he disclosed that before becoming a millionaire, he owed the bank a total of $53 million. Additionally, banks stopped some of his accounts due to a tax debt.
The most current problem originates in the state of California. Tax collectors claim that Ye, the owner and manager of Yeezy Apparel, had an outstanding tax bill of over $600,000. As a result, he received three notifications from the tax division. But he still has to respond to these.
The public chastised Ye for his antisemitic remarks, which led to these problems. As an illustration, Nike just ended its alliance with Ye. In addition, ye was removed from Forbes’ list of billionaires a few months earlier when Adidas and Ye severed their connections. Tax specialists further warn that the debt may indicate more serious structural issues for Ye and his businesses.
“Multiple California tax liens, adding up to $600,000. That’s certainly a sign of either extreme incompetence or extreme cash problems. That is kind of an Amber Alert for the enterprise’s financial health,” said Professor Edward McCaffery from the USC Gould School of Law.
In California, Yeezy Apparel began operating in 2017. The corporation operated effectively and actively contributed to the state’s economy, according to corporate documents kept by the state. Furthermore, Yeezy contributed significantly to Ye’s global commercial visibility.
Ye collaborated with several well-known companies through the brand, including Nike, Adidas, and Gap. And as a result of Ye’s antisemitic remarks, all of these firms severed their connections with him.
Ye receives government liens
According to experts, Yeezy Apparel’s California lien may be related to other problems that other Ye-owned companies are having.
For instance, three of the rapper’s businesses were hit with liens by the state of California, one of which was for a charity from 2012.
“The state is subject to some criticism for sitting on this when there is a going business from which they could collect. However, tax lien indicates that the state maintains that a debt is owing to the state,” said Lynn LoPucki, a University of Florida law professor.
“Those would be unemployment insurance and state disability insurance taxes, things like that,” added Kirk Stark from the UCLA School of Law.
“Consistently ignoring communications from the EDD would eventually be a basis for the department to just say, ‘OK, well then, you know, we’re going to file this lien, and you know, set this in motion,'” Stark added.
“They’ve gotten pretty serious before a lien is usually imposed. This is not the first step of a tax enforcement agency,” explained David Gamage, another law professor from Indiana University Bloomington.
“If you’re screwing up on this, you’ve got bigger problems. And there are probably other things you’re not paying for. But on the other hand, it could be consistent with just kind of a bare-bones operation that’s a little sloppy,” added McCaffery.
Read Also: The New York Times Faces the Longest Walkout in Decades
Uncertainty of the brand’s future
Forbes anticipated that Ye would suffer a large financial loss following Adidas’ decision to end their agreement. In addition, experts point out that it’s still uncertain how the Yeezy brand will do in the future.
Adidas, however, declared that they would keep selling the Yeezy clothing under a new brand.
“Let me be clear, we own all the IP, we own all the designs, we own all the versions and new colorways,” said Adidas CFO Harm Ohlmeyer.
“What he can use is what he has, you know, his trademarks. And any new designs or any new stuff that he comes up with. And I think that’s really where the brand has to go — in my opinion, they’d have to create new stuff,” said Zak Kurtz, Sneaker & Streetwear Legal Services CEO.
“It could align with a new licensee. Perhaps one that can offer the same type of products and services that Gap and Adidas did. Although it seems unlikely that any companies would be willing to take a risk on a volatile brand and designer such as Ye,” added Kenneth Anand, a writer and expert.
“Ye’s recent statements have hurt the Yeezy brand. Consumers are openly declaring that they will no longer support and wear Yeezy. And even if they have spent a considerable amount of money on the brand’s products,” he added.
Read Also: Manhattan Jury Charges Trump with Criminal Tax Fraud
Ye highly criticized
After the artist made anti-Semitic remarks in front of the public, Adidas took a critical stance. They thus ended their agreement with Ye. They indicated that it would result in huge losses for the business.
However, the company steadfastly remained committed to its position that Ye’s actions were unacceptable.
“Ye’s recent comments and actions have been unacceptable, hateful and dangerous. And they violate the company’s values of diversity and inclusion, mutual respect and fairness,” said Adidas.
“After a thorough review, the company has decided to terminate the partnership with Ye immediately. And end production of Yeezy branded products and stop all payments to Ye and his companies. Adidas will stop the Adidas Yeezy business with immediate effect,” it added.
“This is expected to have a short-term negative impact of up to €250 million on the company’s net income in 2022. Given the high seasonality of the fourth quarter. In addition, Adidas is the sole owner of all design rights to existing products and previous and new colorways under the partnership. More information will be given as part of the company’s upcoming Q3 earnings announcement on November 9, 2022,” the statement explained.
Photo Credit: Indigital
Source: NBC
