Hipgnosis Songs Fund (HSF)’s dispute with its founder Merck Mercuriadis took yet another turn today, as the fund revealed it hoped to secure an indemnity to make him liable for any payments from a lawsuit that accuses him of stealing the idea for the music rights fund.
As reported in the Sunday Times yesterday, liquidators of a collapsed business named Hipgnosis Music Limited (HML), which Mercuriadis was a director of, have accused the music mogul of “the unlawful diversion of the Hipgnosis business opportunity”.
Acting on behalf of creditors including Mercuriadis’ former business partners Aeon Manahan and Afram Gergeo, the liquidators allege that he moved HSL’s business into a new entity as it collapsed, at a loss to investors. Georgeo was jailed in his native Sweden in 2021 for his role in a pension fraud scheme.
The lawsuit adds that the London-listed fund and its investment adviser Hipgnosis Songs Management (HSM), which is led by Mercuriadis, benefited from this transfer.
Today, the fund said it has appointed its own solicitors to review the claim and is seeking indemnity “against any liability that might be incurred by the Company resulting from the actions of Mr Mercuriadis or Hipgnosis Songs Management”. The size of the claim has not been disclosed, meaning the amount Mercuriadis could be forced to pay in the event it is successful is unclear.
A spokesperson for Hipgnosis Songs Management and Merck Mercuriadis said both parties denied the claims and intended to defend them vigorously.
The development is the latest in a long-running saga over the future of HSF and Mercuriadis’ role with the fund. Last year, shareholders voted for a resolution to wind the fund up, unless the board presents a plan that convinces them to change their minds in the coming months.
Among its options to win back shareholders, the board has considered ditching HSM and finding a new investment adviser. On Friday, it was announced that Mecuriadis will move from his current position of CEO of HSM to chairman. It is hoped that the change will make it more likely that the fund and HSM can continue to work together.
Shares in HSF are steady at 64.7p this morning. They are down 23% in the past year and 50% since their peak in 2021.