According to The Associated Press, the aforementioned parties filed for bankruptcy on Friday (April 27) in the U.S. Bankruptcy Court in Manhattan claiming that dishonest business practices by former management has caused the magazine's advertisers to flee.
The Source founder Dave Mays and longtime president/rapper Raymond "Benzino" Scott were fired after the magazine lost advertisers and newsstand sales dropped after the magazine published a series of unfavorable articles about Eminem and 50 Cent.
Under Mays and Scott's reign, The Source would also fall deep into debt and they were slapped with a sexual harassment suit by the magazine's former editor-in-chief, Kim Osorio. In November 2006, a judge would award her $8 million.
This marks the second time The Source has headed to bankruptcy court.
Last July, three creditors filed an involuntary Chapter 7 bankruptcy petition for Source Enterprises Inc. claiming the company owed them $562,693. Source Enterprises' bankruptcy was converted to Chapter 11 in September.
Friday's Chapter 11 filings for Source Entertainment and The Source magazine Chapter 11 case have been consolidated with that of Source Enterprises because the two companies have operated as a single entity since 2004, sharing bank accounts and records.
According to court papers, Source Entertainment was designed to operate separately from Source Enterprises and was created to hold and operate non-magazine assets, like copyrights.
Miller said that, since 2004, Source Entertainment and The Source Magazine haven't "conducted any business that is distinct" from Source Enterprises.
LP Harrison III, an attorney for The Source, said the company plans to "exit bankruptcy as a reorganized entity."
Some of the top unsecured creditors of the company include printer Gould Paper Corp. and catalog publisher Quebecor World Inc.