Damon Dash’s one-third stake in Jay-Z’s Roc-A-Fella Records is being auctioned off to settle an $823,000 judgment against Dash from a lawsuit filed by movie producer Josh Webber. This auction, managed by the United States Marshals Service, will take place on August 29 at a Midtown Manhattan hotel, with a minimum bid set at $1.2 million.
Prospective bidders must submit a $240,000 deposit to participate. Dash’s stake in Roc-A-Fella Inc., primarily tied to Jay-Z’s debut album “Reasonable Doubt,” is up for sale, though the rest of Roc-A-Fella’s music catalog is owned by other entities.
Jay-Z and Kareem “Biggs” Burke, co-founders of Roc-A-Fella who own the remaining two-thirds of the company, have attempted to stop the auction by amending the company’s bylaws and intervening in the lawsuit.
However, their efforts were rejected by a federal judge in February. Despite the potential value of the stake, a source indicates there are significant limitations, such as the new owner being a minority stakeholder without decision-making authority and being unable to sell or borrow against the master recordings.
Another critical factor is the approaching expiration date on Roc-A-Fella’s rights to “Reasonable Doubt.” This is tied to a copyright termination right that allows Jay-Z to reclaim the rights to the album 35 years after its 1996 release, which would be in 2031. Consequently, the new owner would have around seven years before this primary asset could be lost.
Webber’s attorney, Chris Brown, argues that the mention of an expiration date is an attempt to lower the auction price. Brown insists the stake offers substantial revenue from streaming and other licenses and notes significant interest from potential bidders. However, he admits that detailed information about what is being auctioned is limited, making rigorous due diligence difficult.
Beyond Webber, the New York City Department of Social Services is also seeking money from Dash’s Roc-A-Fella stake due to his unpaid child support. Additionally, Brown aims to collect another $155,000 owed to him and a client from separate legal actions. If any money remains after these debts are settled, it will go to Dash himself, who expects significant interest and high bids at the auction.
Previously, Jay-Z’s legal team prevented Dash from selling a stake in “Reasonable Doubt” as an NFT by arguing that Dash did not own the rights. They later attempted to stop the current court-ordered sale by claiming it violated company bylaws, but the judge ruled the bylaws were amended without Dash’s input and were thus unenforceable. The judge suggested that Jay-Z and Biggs could address their concerns by participating in the auction and placing the winning bid themselves.
