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Hip-Hop Heavy Weights File Bankruptcy

In the past two months two former hip-hop heavy weights have filed for bankruptcy protection.

Death Row Records chief Marion “Suge” Knight and his record company filed for Chapter 11 last month in a bid to dodge a $107 million civil judgment he was ordered to pay to ex-business associate Lydia Harris, who claims she and her ex-husband, Michael Harris, helped build the rap empire.

Knight claims he's down to $11 in the bank and owes $137.4 million in debts. In a 22-page filing, Knight says his debts include $11.3 million in federal income tax, $437,000 in state income tax, $9,300 to Nextel, $1,100 to Cingular Wireless and $15,000 on his credit card. He said his biggest asset is $4.4million in music publishing and copyrights, on which the IRS has placed a lien.

Knight said he decided to close Death Row Records after the judgment was issued against him and he lost the lease to the label’s offices.

David Mays, founder and former CEO of The Source Magazine, has recently filed for bankruptcy, according to court documents.

Mays lost control of the magazine after defaulting on an $18 million loan from Textron Financial. Textron Financial has been attempting to auction the 82% in shares that is controlled by Mays and Scott. The remainder of the shares is controlled by Black Enterprise/Greenwich Street Corporate Growth Partners.

The auction of his Mays shares was halted for a second time in light of Mays' declaration of bankruptcy on May 4.

The Source founders lost a court battle with Black Enterprise/Greenwich Street Corporate Growth Partners backed by Earl Graves, Sr. and Citigroup two months ago. Dave Mays and Raymond “Benzino” Scott, the former owners of the magazine, has been in a legal fight with Black Enterprise/Greenwich Street Corporate Growth Partners for control of The Source magazine.

The judge in that case said, "Mays willingly signed these contracts giving BE/Greenwich Street Fund the right to take control if he defaulted on debt obligations. By not fulfilling these obligations David Mays has lost control of the company and will lose all ownership."

One other notable hip-hop bankruptcy was that of Master P’s No Limit Records which filed for bankruptcy in 2003.

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