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Hipgnosis Songs Fund is suing Barry Manilow over bonus payments tied to its purchase of the American singer’s back catalogue.
A lawsuit filed at the High Court in London on Monday described the case as a breach of contract, without providing further details.
Founded by entrepreneur Merck Mercuriadis, Hipgnosis was a driving force behind the emergence of music rights as an asset class, using the royalties from steaming, radio play and performances to provide income for investors hunting for returns in the era of record-low interest rates.
Hipgnosis, whose portfolio includes music by the Red Hot Chili Peppers and Shakira, acquired the rights to 917 songs by Manilow in 2020. The 81-year-old’s hits include Copacabana (At the Copa) and Mandy.
In a statement to the Financial Times, Hipgnosis said: “That in discussion with Mr Manilow’s representatives it became clear that there was a difference in understanding of certain clauses in the sale agreement regarding bonus payments.”
The dispute is over a sum in the low single-digit millions, said a person familiar with the matter.
Representatives for Manilow did not respond to requests for comment.
At the time of the sale, Manilow hailed Mercuriadis for creating a “new type of music company”. Mercuriadis described Manilow as an “international treasure”.
Last year Billboard reported Rod Stewart had backed out of a potential catalogue sale to the company after two years of negotiations.
The lawsuit follows a calamitous period for Hipgnosis after rising interest rates undercut its business model, sending its share price below the valuation that the group put on its music portfolio.
Earlier this year, Hipgnosis agreed to a $1.6bn takeover by private equity group Blackstone. Mercuriadis last month said he would step down following the completion of the sale.
