Death Row Trustee Aims to Start Paying Creditors

Creditors of Death Row Records and Marion “Suge” Knight may soon see their first payment in nearly eight years, although one obstacle could come from none other than the rapper Dr. Dre.

Lawyers representing the rapper, whose given name is Andre Young, recently notified a bankruptcy judge that they’d file a $3 million claim on the rapper’s behalf in the bankruptcy cases of the record label and its founder, Mr. Knight. The claim seeks payment for records sold during the bankruptcy case, according to court papers.

Dr. Dre’s lawyers said they’d ask that the claim be paid ahead of other creditors, which they acknowledged could “significantly impact” an ongoing effort to get a payment out to those creditors soon.

R. Todd Neilson, the bankruptcy trustee overseeing the liquidations of Death Row and Mr. Knight, next week is slated to ask a Los Angeles bankruptcy judge for permission to distribute more than $4 million to creditors, among them the mother of deceased rapper Tupac Shakur.

Those creditors have been waiting in line for payment since April 2006, when Mr. Knight and his record label—known for putting out albums by Tupac, Dr. Dre and Snoop Dogg—sought court protection.

“Creditors will not need to wait additional months or longer to receive any payment,” Mr. Neilson said in court papers.

The bulk of the payments, $3.1 million, would go to the Internal Revenue Service and the city and county of Los Angeles. Half a million dollars would cover a legal settlement, while general unsecured creditors owed $4.6 million would share in another half million–a recovery of approximately 11%.

Without taking Dr. Dre’s request into account, Mr. Neilson’s proposed distribution would leave $2.1 million behind, which the trustee says will help him pay for ongoing litigation as well as make another payment to unsecured creditors in the future.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ.