Hipgnosis Songs Fund (HSF), its investment adviser, and founder Merck Mercuriadis have officially been served with a lawsuit stemming from the latter’s long-defunct Hipgnosis Music Limited (HML) operation.
HSF disclosed this latest litigation-related development in a recently published release that touched upon several topics. We first reported on the courtroom confrontation back in July, when Hipgnosis said it’d “become aware” of the High Court complaint.
But the publicly traded songs fund further maintained it was in the dark about the specifics of the action, which, according to execs, hadn’t yet been served. At roughly the same time, UK-based outlets including the Telegraph indicated that the suit had been filed by liquidators of the aforesaid Hipgnosis Music Limited.
Founded in 2015 by Mercuriadis and Swedish businessman Afram Gergeo, HML upon winding up in 2018 owed approximately $4.54 million (£3.6 million) to creditors, per the noted source.
While the same outlet didn’t dive into the involved claims’ particulars, it did highlight that the purported misconduct concerned an alleged breach of fiduciary duty. (Also mentioned was that Gergeo had subsequently been “imprisoned for his role in an elaborate Maltese pension scheme fraud that lost millions of pounds of savers’ money.”)
Now, four months and change later, Hipgnosis Songs Fund, Blackstone-powered Hipgnosis Song Management (HSM), and Mercuriadis alike have been served with the complaint.
As described by HSF, “Hipgnosis Music Limited alleges a diversion of business opportunity from Hipgnosis Music Limited (of which Mr Mercuriadis was previously a director)” to the relevant (and newer) Hipgnosis entities. Additionally, HSF is said to have “unlawfully assisted…Mercuriadis with, or received, this alleged diversion.”
Predictably, the longtime music manager, HSM, and HSF “deny such claims and intend to vigorously defend them.” Hipgnosis Songs Fund, it was made clear for good measure, “is not insured as to the costs of dealing with this claim.”
Besides this information, concrete details about the suit remain relatively few and far between; neither HML itself nor its liquidators appeared to have commented publicly on the subject at the time of writing. Though HSF’s remarks on the matter seem limited to those described above, the troubled fund is separately in the process of appointing a new auditor and executing a strategic review.
In the absence of an investor-approved deadline extension, said strategic review is expected to conclude with the announcement of a related roadmap on April 26th, 2024 at the latest, or six months after HSF shareholders voted against the fund’s continuation. During today’s trading hours, HSF stock (LON: SONG) slipped by 2.2 percent to finish at 69 pence per share.