The Source Magazine's founder and former CEO Dave Mays has filed for bankruptcy protection, temporarily halting an auction sale of his stock in the Hip-Hop publication.
The auction of his share was halted for a second time in light of Mays' declaration of bankruptcy yesterday morning (May 4).
Mays lost control of the magazine after defaulting on an $18 million loan from Textron Financial.
In March, a judge ruled that Mays willingly signed contracts giving Black Enterprise/Greenwich Street Partners the right to take control if he defaulted on debt obligations.
By not fulfilling these obligations, Mays lost control of the company, along with full ownership.
Mays' 82 % stake is being sought after by at least three suitors, including Marc Ecko, Earl "Butch" Graves in conjunction with Black Enterprise, and Partnership Equity.
"We found out about the bankruptcy claim at the same time everyone else did," Clint Cantwell, communications director for Ecko Unlimited told AllHipHop.com. "But overall, The Source is a great brand and certainly worth pursuing. I think it would be a great blend with us having Complex Magazine under our belt. So, we'll see how things work out at the auction, whenever the auction actually takes place."
Mays' attorney David Finkler declined to comment.
After Mays and his partner Ray "Benzino" Scott were ousted, Black Enterprise appointed former editor Jeremy Miller to the position of CEO of The Source.
Miller said he and his staff were anxious to see the court proceedings end.
"I hope the person who purchases [ The Source will keep the magazine as is, because we're on the right track to progress and get the magazine back to where it used to be," Miller told AllHipHop.com. "I would hope we don't have to start over. Right now, guys from Black Enterprise wouldn't have a problem if they owned the full share of the company."