Legal News

?Gangster-Style? Business Ops Jack Up Kaye Scholer Bankruptcy Bill

By Dan Slater

AmLaw Daily has a fun item about Kaye Scholer’s representation of the trustee of bankrupt music producer Death Row Records, which was co-founded by Dr. Dre and Marion “Suge” Knight (pictured).

Rapper Tupac Shakur, left, and former Death Row Records Chairman Marion Suge Knight, attend a voter registration event in South Central Los Angeles, Aug. 15, 1996. (AP)

In its $6.8 million fee request, KS bankruptcy attorneys write:

The representation of the Trustee in this case has been particularly complex due to the individuals involved in the company’s operations and intentionally illicit, ‘gangster-style’ business operations of the debtor.

Death Row, as AmLaw Daily notes, sold for only $18 million at auction. But Death Row’s unsecured creditors are owed far more than that. Lawyers at Pachulski Stang Ziehl & Jones, who represent the creditor’s committee, have asked a federal bankruptcy court in California to hold off on approving Kaye Scholer’s fee request. The court is scheduled to hear discussion on the fee issue today.

According to the Kaye Scholer lawyers, Suge Knight, who has served more than five years in prison on various assault charges, was so sloppy in keeping Death Row’s business records that both Kaye Scholer and the Pachulski firm had to scour the country in order to track down the label’s assets. A few examples of bankruptcy lawyers’ work in the case:

• Identifying and working to recover assets, including a Malibu home, that Knight transferred to friends in an effort to shield those assets from creditors.
• Uncovering a secret storage locker in Michigan that contained a “treasure trove” of unreleased songs by famous Death Row artists.
• The family of the late Tupac Shakur, perhaps Death Row’s most famous artist, fought a protracted legal battle against Kaye Scholer’s attempts to exercise a $100,000 option Knight held to purchase previously unreleased tracks by the rapper. The firm won.
• The two law firms had to negotiate settlements with at least three women who claimed Knight owed them more than $500,000 in child support.

Marc Cohen and Ashleigh Danker, the lead Kaye Scholer attorneys on the case, did not return AmLaw Daily’s calls seeking comment.

Full post as published by Law Blog - WSJ.com on January 22, 2009 (boomark / email).