Suge Knight has moved to stop his record company from being forced into liquidation by filing for Chapter 11 protection from the US federal bankruptcy courts.
As previously reported, the LA courts, who froze the hip hop mogul's assets last summer, had threatened to seize those assets, including Death Row Records, as part of the ongoing legal dispute regarding claims by one of Knight's former business partners Lydia Harris.
Harris claims she co-founded the label but was later forced out of the business, and that Knight therefore owes her a share of Death Row's subsequent profits. The LA courts ordered Knight to pay Harris $107 million last March, a payment he has so far failed to make - at one point claiming Harris had in fact accepted an out of court settlement involving a much smaller sum. But Harris' lawyers continued to push for payment, while Knight repeatedly failed to attend court hearings regarding the debts.
In order to force payment the LA courts had threatened to seize and sell off Knight's assets, with judges planning to begin that process yesterday. In a bid to stop them, Knight's legal people yesterday announced the hip hop mogul had insufficient funds to pay Harris and that he had filed for chapter 11 bankruptcy protection from the federal courts, which prevents the LA courts from proceeding with any action.
The bankruptcy courts will now have to consider if and how Death Row can be reorganised to ensure its future, and who should have a stake in it. Knight intends to continue running the record label while the bankruptcy proceedings go through the motions.