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Artists “unlikely” to receive any money from PledgeMusic liquidation, says official receiver
By Andy Malt | Published on Wednesday 23 October 2019
Any remaining hopes that artists might see some of the money they were owed by the collapsed PledgeMusic seem to be gone. The government-appointed court official overseeing its liquidation has said that it is “unlikely” that any creditors of the company will be paid.
The official receiver’s report was sent to those still owed money by PledgeMusic earlier this week and did not offer good news. “I do not anticipate that I will need to contact you again because there is unlikely to be a payment to creditors in this case”, it says, according to Variety.
Those creditors are largely made up of artists who used the crowdfunding and pre-order platform to raise money to release their music. Many incorrectly assumed that Pledge held this money in trust for the artists, passing it on (or not, as it turned out) once they’d hit their funding target. A set up of that kind would have given those artists some other legal avenues to claim what was owed to them if and when the Pledge company fell apart.
The receiver’s report confirms that was not the case, stating that legal advisors for PledgeMusic’s board members have indicated that funds held by the company “were not trust monies” and therefore belonged to the company, rather than the artists.
PledgeMusic finally went into administration in August after months of uncertainty. The company admitted a year ago that it was facing financial difficulties, but said that it had made internal changes to overcome this. However, artists continued to complain about delayed payments, and in February this year all payments were suspended as various attempts to rescue the company were pursued.
In May, it was announced that the company would be heading into administration, but it was another three months before this happened as negotiations to attempt to secure a buyer continued.
Elsewhere in the report, some light is shed on co-founder Benji Rogers’ departure from the company and his more recent return as an unpaid advisor. The report states that Rogers resigned from the company’s board in February 2018 following “a disagreement with the board concerning its business plan”. Rogers had already stepped down as the firm’s Chief Strategy Officer a year earlier.
It was only after severing ties with the company he founded that Rogers began receiving complaints from artists saying that they were not being paid, he told the receiver. He says that he attempted to help, but was not able to meet with the Pledge board until January of this year, at which point he returned on a voluntary basis to try to secure a buyer for the company.
Other board members interviewed for the report confirmed all of this, and opined that the company ultimately failed because the commission it took from monies raised by artists was simply “insufficient to meet its expenditure”.
There have been many rumours about what might have led to PledgeMusic’s collapse, it not charging enough for its services being the simplest. The report says that “enquiries into the company’s affairs and reasons for its failure are continuing”.
