No One at the Helm: Trustee Appointed to Manage Death Row Records

by Jillian McClelland September 12 2006, 00:13
Suge Knight’s hopes of maintaining control of Death Row Records during its Chapter 11 reorganization were dashed on July 7, 2006, when United States Bankruptcy Judge Ellen Carroll placed the company under the management of a case trustee. Judge Carroll cited gross mismanagement of the record company’s finances, stating, "it seems apparent that there is no one at the helm." [1]

The Death Row case illustrates a pervasive tension in corporate reorganizations: at what point does the interest of the creditors trump the vested control of management, which may have driven the company insolvent in the first place? Under certain conditions, the bankruptcy court has the power to transfer control of the estate from the debtor-in-possession to a trustee under section 1104(a) of the Bankruptcy Code. [2] [More]

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