By John Clark
A contentious relationship between musician Sly Stone and his former manager, Jerry Goldstein, has grown even more heated thanks to a recent bankruptcy filing, according to a report from the Wall Street Journal.
Sources say Goldstein sent two of his music production companies into bankruptcy protection in order to block an effort by Stone’s lawyers to retake the rights to the musicians’ royalty payments.
And the ensuing legal battle promises to grow more interesting, as both parties seem determined to gain access to the music rights, according to reports.
Music Manager Files Bankruptcy to Thwart Former Client
According to reports, Goldstein helped Stone rise to prominence decades ago by co-writing songs like “My Boyfriend’s Back and “Hang on Sloopy.”
But after the two parties struck a management deal in 1989, Goldstein, through his company, Even Street Productions, assumed control over the rights to Stone’s royalties.
Stone’s attorneys, however, believe that Easy Street Productions, which was sent into bankruptcy protection this week along with Majoken, Inc., lacks “corporate formality,” and is merely a shell company designed to hold Goldstein’s assets.
Interestingly, after Goldstein filed for bankruptcy, Stone’s lawyers bought a $1.7 million judgment against the business manager from First California Bank, which won the judgment after Goldstein defaulted on a loan.
The purchase was a savvy move by Stone and his legal team, because it allows them to potentially file for foreclosure against Goldstein’s assets, including the royalties that Stone believes belong to him.
Sly Stone Tussles With Former Manager in Bankruptcy Court
But Goldstein’s attorneys have challenged the validity of Stone’s tactics, accusing the former singer and his attorneys of “attempting an end-run around the royalty litigation, to obtain by purported foreclosure that which they have not obtained in the royalty litigation.”
In response, Stone’s attorneys say the 70-year-old entertainer, who has launched several failed comebacks and has been homeless off and on for several years, is simply trying to recover rights he unwittingly relinquished in 1989.
Before this fight is resolved, however, Goldstein must take care of his bankruptcy, which includes his companies, Majoken and Even Street.
During the bankruptcy, though, Goldstein will also have to contend with a $50 million lawsuit filed by Stone against his former manager. In the lawsuit, Stone alleges that Goldstein stole royalties from him and hid the money in his bankrupt companies.
Goldstein, meanwhile, has filed a slander lawsuit against Stone, claiming that the singer defamed him by calling him a thief at a music festival in 2010.