Hipgnosis Songs Fund and Merck Mercuriadis Sued by Former Hipgnosis Music Limited Over Business Diversion
Hipgnosis Songs Fund (HSF), its investment adviser, and founder Merck Mercuriadis have been served with a lawsuit from Hipgnosis Music Limited (HML), a defunct company previously co-founded by Mercuriadis in 2015.
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The lawsuit, filed in the High Court, alleges that Mercuriadis diverted business opportunities from HML to newer Hipgnosis entities. HML's liquidators claim that HSF "unlawfully assisted" with this alleged diversion. When HML wound up in 2018, it reportedly owed creditors approximately $4.54 million (£3.6 million).
Key points about the lawsuit:
- Primary allegation: Breach of fiduciary duty
- Defendants: HSF, Blackstone-powered Hipgnosis Song Management (HSM), and Merck Mercuriadis
- HSF is not insured for costs related to this claim
- All defendants deny the claims and plan to defend them vigorously
This legal challenge comes at a crucial time for HSF, which is currently:
- Appointing a new auditor
- Conducting a strategic review (due by April 26, 2024)
- Dealing with declining stock value (dropped 2.2% to 69 pence per share)
The lawsuit's timing coincides with HSF shareholders' recent vote against the fund's continuation, requiring the completion of a strategic review within six months. HML's liquidators have not provided additional public comments on the lawsuit's specifics.
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