Proper Group AG, the Swiss company formerly known as Utopia Music AG, has been hit with bankruptcy proceedings by a court in Switzerland. The “provisional announcement of bankruptcy” was filed on Tuesday after Proper Group failed to attend a court hearing relating to a debt of CHF 23,000.
The court action was brought by MME Legal, a Zug-based legal consultancy that describes itself as an “innovative consulting company” that “supports and represents companies and private individuals in all economic and future-oriented matters”. In particular, MME highlights its expertise in blockchain and digital assets, saying “we guide our clients in developing, operating and offering digital or blockchain-based applications”.
A Proper Group spokesperson told CMU that the company was “unaware that the claimant had initiated proceedings and consequently missed a hearing on Tuesday. As a result, the court issued a default ruling in favour of MME Legal”.
The company’s spokesperson says, “We are disappointed that bankruptcy proceedings have been triggered. Our company was unfortunately unaware that legal proceedings over a minor debt were taking place, and as a result we were not represented at the court hearing”.
CMU understands that this is a result of a downsizing exercise that has been taking place across the business and that there were no appropriate staff on hand in the company’s Swiss offices to receive and process the hearing notice in good time. As a result, the company is putting mechanisms in place to ensure that the same thing does not happen again.
However, the bankruptcy proceedings mean that the company will now have to demonstrate to the court that this debt has been settled and that it is more generally solvent.
In a statement issued to CMU today, Proper has confirmed that the debt of CHF 23,000 was settled yesterday, with the company spokesperson saying, “Our debt has now been settled and we are of course appealing this decision. Recent positive developments in the business have placed us on track to near-term cash flow positivity, with clear prospects of profitability by 2025, so we expect to reach a favourable outcome”.
Proper Group has faced significant legal and financial challenges over the past year after its previous hype-driven acquisition spree began to unravel, leading to multiple companies across Europe entering into insolvency proceedings and staff left out of pocket.
Recent changes in leadership and direction after a boardroom coup initiated by key investors in the company in late 2023 have brought some stability and renewed direction. However the company still faces some significant legal and financial hurdles including multimillion pound insolvency proceedings relating to its UK subsidiary Utopia UK (R&D) Limited and a recent court judgement relating to its botched acquisition of US royalty finance firm Lyric Financial. That judgement means that Proper Group owes more than $1.8 million to the founders of Lyric, with interest mounting daily.
The company now has until 7 Oct to file its appeal with the Swiss courts to halt the bankruptcy proceedings, with Proper Group saying that it is “confident in our ability to halt proceedings”.