Hipgnosis Songs Fund has announced it intends to seek indemnity from Merck Mercuriadis and investment adviser Hipgnosis Songs Management (HSM) over legal claims from its founder’s former business.
Mercuriadis stood down as chief executive of HSM on Friday (2 February), instead being named chair. Chief operating officer Ben Katovsky has been named COO.
Hipgnosis Music Limited, a former business of Mercuriadis, has alleged an “unlawful diversion” of the Hipgnosis business opportunity, and has issued and served High Court proceedings against the trust, HSM, and Mercuriadis himself.
Hipgnosis Songs said: “As any liability of the company arises from Mr Mercuriadis’ conduct and knowledge, the company intends to seek to secure an indemnity from Mr Mercuriadis and Hipgnosis Songs Management against any liability that might be incurred by the company resulting from the actions of Mr Mercuriadis or Hipgnosis Songs Management.”
The trust recently appointed Kastle Solicitors to review the claim.
In January, the investment adviser refused to remove the call option from its advisory agreement with Hipgnosis Songs despite calls from the trust’s new board, who labelled the option a structural conflict of interest.
The trust’s board also tabled a special resolution offering up to £20m to any prospective bidders seeking to acquire the trust’s assets.
In a move to entice buyers, the proposal seeks to provide protection to prospective bidders who receive a board recommendation against their due diligence and acquisition costs. The trust’s board has called an extraordinary general meeting to vote on the proposal.
