Hipgnosis Songs Fund has launched legal action against its fund manager Hipgnosis Songs Management (HSM) and founder Merck Mercuriadis.
The music royalties trust said that HSM had refused to protect it against potential liabilities from claims brought by former business partners of Mercuriadis that accuse him of stealing the idea for Hipgnosis in 2018.
Mercuriadis and HSM said they plan to vigorously defend the claims and they are without merit, but the trust said it was “concerned” that a request for indemnity was refused.
Therefore, the trust said it was now planning to bring a Part 20 Claim in the High Court against HSM.
“The investment adviser, which was founded by Mercuriadis and where Mercuriadis is a director, has refused to indemnify the company against liabilities which may arise from Mercuriadis’ alleged misconduct,” the trust’s board wrote in a stock exchange notice today.
The trust, which is not insured to cover the cost of the claim, said earlier this month that it had appointed a legal firm to seek protection from any financial costs from the case.
Kastle Solicitors has been brought in to independently review the High Court claim by Quantuma.
Last week, the trust’s independent valuer exited its role over a dispute around the valuation of the fund’s catalogue.
Citrin Cooperman flagged concerns about the valuation provided by its longtime music rights specialist Barry Massarsky last year.