Challenges continued to mount for music royalty firm Hipgnosis Songs Fund today as it confirmed it has been served with legal proceedings it does not have the insurance to cover.
Hipgnosis Songs Fund has been severed with proceedings along with Merck Mercuriadis, the company’s founder and investment adviser by Hipgnosis Music.
Hipgnosis Music, which has been in liquidation since 2018, has alleged Merck Mercuriadis, who was previously a director of the company, diverted business opportunities away from Hipgnosis Music to Hipgnosis Song Fund.
It also alleges that the company unlawfully assisted Mercuriadis with this alleged diversion.
The company, its investment adviser and Mercuriadis all deny these claims.
The legal challenges were first flagged by Hipgnosis Song Fund in its annual report back in July. The disclosure of the potential claim was buried on page 100 in a short paragraph, however.
Hipgnosis Music’s claims come at a difficult time for the beleaguered firm, which owns the rights to several big-name artists such as Shakira and Neil Young.
In October, its shareholders put a halt to a planned $440m (£363.3m) sale of music rights to investment firm Blackstone and ousted its chair, Andrew Sutch. The vote prompted the board to table proposals for a reorganisation or wind-up within six months.
The company also confirmed on Thursday that Big Four accountant PwC has refused to audit its accounts, forcing them to find a new auditor.
City A.M. has reached out to Hipgnosis but has not yet received a response.