A US federal courtroom has upheld an arbitration panel’s ruling that financially troubled music firm Utopia Music should pay practically USD $1.9 million to the previous house owners of Lyric Monetary.
As a part of a multi-year acquisition spree, Switzerland-headquartered Utopia acquired Lyric Monetary in October 2021.
In keeping with courtroom paperwork, Utopia Music – which just lately rebranded itself as Correct Music Group – agreed to pay $8 million for Lyric Monetary, with $5 million to be paid upfront, plus two deferred funds of $1.5 million to be made at later dates.
Lyric Monetary’s former house owners went to courtroom in September 2023, stating that they’d by no means obtained the ultimate $1.5 million fee from Utopia. The case was despatched to a London-based arbitration tribunal, which dominated in favor of Lyric Monetary’s former house owners in June of this yr.
The arbitrator ordered Utopia to pay the complete quantity owed, plus curiosity and bills, which got here to $1.863 million.
On Friday (July 19), the US District Court docket for the Southern District of New York upheld that call in a civil judgment, ordering Utopia to pay the complete quantity owed, plus extra curiosity from the time the courtroom petition was filed to the second Utopia makes the ultimate fee. The total order will be learn right here.
Lyric’s former house owners embody Tennessee-based Music World Leisure Company and EDE LLC, an organization owned by Richard Eli Ball, and Claritas Personal Credit score Fund, amongst others.
Lyric Monetary supplies advances to artists, songwriters, producers, document labels and music publishers, in trade for future royalty revenue streams. It was considered one of greater than a dozen acquisitions made by Utopia as the corporate scaled up in an obvious bid to determine itself in quite a few features of the music trade, together with distribution, financing, information, and royalty administration.
These wide-ranging plans started to bitter as the corporate confronted rising monetary pressures, which Utopia has hinted resulted from the spike in rates of interest seen lately.
Utopia has applied a number of rounds of layoffs, which have resulted in staffing ranges falling from round 1,200 to some 250 full-time equal positions, excluding contractors and workers at its UK bodily music distribution warehouse.
The corporate additionally offered off a few of its many acquisitions, together with music publishing platform Sentric, which it offered to France-headquartered Imagine within the spring of 2023, and Absolute Label Providers, which Utopia offered to its authentic administration staff in the summertime of 2023.
Regardless of the numerous scaling again of its operations, Utopia – now formally Correct Music Group – continues to grapple with monetary issues. The corporate went to shareholders earlier this yr, asking for an emergency €6 million (approx. $6.4 million) money infusion.
Within the London arbitration hearings, Utopia argued that it didn’t make the ultimate fee for Lyric Monetary as a result of Lyric hadn’t delivered on a brand new device, ARTiE, that will allow Lyric prospects to combine a number of income sources inside a single account.
Utopia stated that the ARTiE product delivered by Lyric Monetary didn’t stay as much as the situations set out within the sale settlement, and Utopia needed to spend its personal cash to construct a substitute.
The arbitrator rejected that argument, accepting the declare by Lyric’s former house owners that it was the second fee, and never the third and ultimate fee, that was contingent on ARTiE’s supply, and that Utopia had successfully accepted supply of the product by making the second fee.Music Enterprise Worldwide