The catalog size of Hipgnosis Songs Fund as identified in interim and annual updates, 2019-23. This resource was first published as part of our latest DMN Pro Weekly research report. Photo Credit: Digital Music News
Closer to February’s beginning, Hipgnosis Songs Fund (HSF) announced that it was commencing legal action against its investment adviser to secure “a full indemnity” from a lawsuit submitted by a defunct Hipgnosis entity. Now, this indemnity push has extended to founder Merck Mercuriadis.
HSF just recently unveiled the broader scope of its indemnity pursuit, having initially disclosed plans to shield itself from liability towards the top of the month. This liability stems specifically from a complaint, reportedly alleging breach of fiduciary duty and more, levied by the liquidators of the long-defunct Hipgnosis Music Limited (HML).
In the interest of brevity – we previously explored HML’s decidedly convoluted history at length – Merck Mercuriadis in 2015 founded the HSF predecessor alongside individuals who were later sentenced to prison time for their role in a pensions scam.
Building on that point, HML upon being wound up in 2018 reportedly owed millions to creditors. The exact details of the High Court complaint haven’t yet been publicly revealed, but evidence suggests that the suit followed a thorough investigation from the noted liquidators, who named as defendants HSF, its Hipgnosis Song Management (HSM) investment adviser, and Mercuriadis alike.
Amid a widening rift between HSM and HSF (the revamped board of which has taken several significant steps since a key October vote from investors), the latter hasn’t hesitated to try and distance itself from the lawsuit as of late. (Well before the management-investor showdown entered high gear, HSF in July of 2022 said it’d “become aware” of the action.)
To be sure, HSF, evidently uninterested in renewing its investment advisory pact with HSM, indicated on February 5th that it’d appointed Kastle Solicitors “independently of the other defendants…to review the claim.” Moreover, the songs fund emphasized its plans “to seek to secure an indemnity from” HSM as well as Mercuriadis.
That effort evidently failed to bring about the desired result; February 19th saw HSF claim that HSM had rejected the indemnity request. Consequently, HSF said it would “bring a Part 20 Claim in the High Court against the Investment Adviser in which it will seek a full indemnity.”
As mentioned at the outset, HSF has taken an identical step against Mercuriadis, per a new release that closely resembles the announcement message concerning the claim against HSM.
HSF “has now been informed by” Mercuriadis that he’s “refusing to indemnify” it from the HML liquidators’ suit, according to the text. “The Company now intends to bring a Part 20 Claim in the High Court against Mr Mercuriadis in which it will seek a full indemnity,” the straightforward document proceeds to spell out.
At the time of this writing, Mercuriadis didn’t appear to have responded publicly to the development; despite their intensifying dispute, HSF and HSM are both still publishing releases on the main Hipgnosis Songs website.
In any event, it goes without saying that the news isn’t an encouraging sign for the long-deteriorating HSF-HSM relationship – especially given the former’s ongoing attempt to bring potential third-party catalog buyers to the table.
