The Hipgnosis v Hipgnosis battle continues, with the Hipgnosis Songs Fund - or SONG - informing its investors that it is taking legal action against its investment advisor, Hipgnosis Song Management. The lawsuit is part of a bid by SONG to indemnify itself in relation to an entirely different Hipgnosis v Hipgnosis legal battle.
The London Stock Exchange-listed SONG told investors last year that it had been named as a defendant in a lawsuit filed by the liquidators of a defunct Hipgnosis company called Hipgnosis Music Limited.
That lawsuit targets both SONG and HSM, as well the founder of all the Hipgnosis businesses, Merck Mercuriadis. The liquidators of Hipgnosis Music Limited have alleged that, prior to the winding up of the company, there was a “diversion of business opportunity” to SONG and HSM, ie an opportunity that should have been pursued by Hipgnosis Music Limited was taken up by the other Hipgnosis entities.
In terms of SONG specifically, the lawsuit alleges that the fund “unlawfully assisted Mr Mercuriadis with, or received, this alleged diversion”.
At the time of that investor update it was confirmed that SONG, HSM and Mercuriadis “deny such claims and intend to vigorously defend them”. Earlier this month the current board of SONG - which was appointed last year and has repeatedly criticised HSM - confirmed it was seeking to secure an indemnity from HSM in relation to the lawsuit, basically ensuring the fund and its investors won't lose out financially as a result of the litigation.
In a statement this morning, the board said: "The investment adviser, which was founded by Mr Mercuriadis and where Mr Mercuriadis is a director, has refused to indemnify the company against liabilities which may arise from Mr Mercuriadis' alleged misconduct".
"The company is concerned, having been assured by Mr Mercuriadis and the investment adviser that these claims are without merit and that they intend to vigorously defend them, that the request for an indemnity was refused", they continued, adding, "The company is not insured as to the costs of this claim".
With that in mind, they stated, "the company now intends to bring a Part 20 Claim in the High Court against the investment adviser in which it will seek a full indemnity".