Troubled investment trust Hipgnosis (SONG) has revealed both the company itself and founder Merck Mercuriadis have been served with a legal claim over alleged “diversion of business opportunity”.
The claim has been filed by Hipgnosis Music Limited, Mercuriadis’ former company, which has been in liquidation since 2018.
The claimant alleges a diversion of business opportunity from Hipgnosis Music Limited to the investment trust of the same name and its investment adviser.
It also alleges that the music royalties trust unlawfully assisted Mercuriadis with, or received, this alleged diversion.
Mercuriadis, the investment adviser and the company deny the claims and intend to “vigorously” defend them.
Hipgnosis is not insured as to the costs of dealing with the claim, it said.
The trust also offered an update on its strategic review, saying it intends to appoint independent advisers to conduct due diligence on its assets.
This will provide “a strong knowledge base” to use in a process of identifying the best path forward, the trust said in its stock exchange statement.
Hipgnosis has been struggling in recent months following a big drop in expected royalties, and has been seeking to sell off some of its portfolio.