Hipgnosis Songs Fund has ramped up legal action against its founder Merck Mercuriadis today in a bid to secure protection from a lawsuit which alleges he stole the idea for the company.
Hipgnosis Songs Funds launched legal action against founder Merck Mercuriadis and investment manager Hipgnosis Songs Management earlier this month to try and secure indemnity against a high court case.
Quantuma, the liquidators of the original Hipgnosis Music Limited, claim Mercuriadis transferred the original idea for the business into a separate company of his own and lost investors’ cash in the process.
Hipgnosis Songs Fund had looked to protect itself from the potential fallout and cost of the case by suing Mercuriadis for indemnity
However, in a notice to the market today, Hipgnosis Songs Fund said he had rejected the plea and the firm would now file a part 20 Claim in the High Court against him “in which it will seek a full indemnity”.
The move marks a deepening of the strains between the firm’s board and its former investment manager and founder as the company foes through a strategic review triggered by a shareholder revolt in October.
Hipgnosis Songs is probing claims Mercuriadis “cherry picked” the best assets for a portfolio sale that was blocked by shareholders last year.