News: Poor Accounting Leads Label to Bankruptcy Court
Pointing to poor accounting practices, a federal bankruptcy court judge has handed control of Death Row Records over to a bankruptcy trustee.
The record label, helmed by Marion "Suge" Knight, reportedly has more than $100 million in debts and assets valued between $1 million and $10 million. Knight testified last week that he hasn't reviewed financial statements in nearly a decade.
Last week, Judge Ellen Carroll ruled that Death Row's business has suffered from gross mismanagement, and authorized the trustees of Death Row Records to take the assets that are left from the label and convert them into cash to pay off creditors. Knight filed for bankruptcy protection in April.
Knight's attorneys had argued that the label was in the middle of being renamed Tha Row and that Knight was negotiating distribution deals for the label's lucrative back catalog, which features several albums from big-name rappers, including Dr. Dre and Snoop Dogg.
Knight is also facing a lawsuit from Lydia Harris, who claims that she and her ex-husband, Michael, who invested $1.5 million in the label during its early days, own half of the business. The Harrises were awarded a default judgment in the amount of $107 million dollars after Knight missed numerous court dates to provide information about the label's finances.
Knight's most recent legal troubles were borne out of more physical charges. He was jailed for five years in 1996 for violating probation of an assault conviction in 1992. He served another year between 2003 and 2004 for violating his parole after punching a nightclub parking attendant.
Although the glory days of Death Row records have been long gone, the final nail in the coffin occurred in a courtroom on Friday when a federal judge authorized a bankruptcy trustee to take over ownership.
The one-time home to multi-platinum artists Snoop Dogg, Dr. Dre and Tupac Shakur had become a ship without a captain, according to U.S. Bankruptcy Judge Ellen Carroll, who stated "it seems apparent there is no one at the helm."
Knight, 41, told a court in May that he only had $11 to his name (along with about $28,000 in material possessions). He also testified that the last time he checked the label's financial records was at least 10 years ago.
Knight's lawyer Daniel McCarthy argued Friday that his client was still "at the helm" of Death Row, which has since been renamed Tha Row, and had been working on securing distribution deals for the label's catalog.
"Please give him some time to do that," McCarthy asked the judge.
Knight was a no show in court Friday - a fact his creditors' attorneys emphasized as proof of his absence "at the helm."
Knight also skipped a meeting with his creditors earlier in the week after injuring himself in a motorcycle accident last Sunday. Knight was "under doctor's orders not to even go out," his lawyer said. Another scheduled meeting with the creditors was missed after Suge said he had experienced a death in his family.
Meanwhile, trustee owners of Death Row may take whatever assets are left and convert them into cash to pay off the creditors.
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