PledgeMusic Owes $9.5M Leaving ‘Little Prospect’ That Artists Will Be Paid says UK Court
[UPDATE] PledgeMusic entered liquidation with $9.57 million in debt and assets worth just $20,000, according to court documents obtained by Hypebot. With an "estimated deficiency" of $9.5 million and secured creditor Sword Row, LLC first in line, there is "little prospect" that artists and other creditors will be paid, according to the court-appointed receiver.
Key to any criminal prosecution of PledgeMusic directors or former executives, the Pledge board claims that legal advisors "indicated that Pledge monies were not 'trust' monies." In other words, the company operated under the premise that the money that fans were paying to artists via PledgeMusic to help them crowdfund recordings and other projects, was legally the company's to spend.
The court documents also include extensive testimony from PedgeMusic founder and former CEO Benji Rogers, who returned to the company several times in failed attempts to try to save the troubled crowdfunder.
"Mr Rogers states that he was CEO for approximately 8 months and then the chief strategy officer until February 2017 and during this time, he reduced the overheads of the company and increased sales. He worked on a pivot plan to turn things round so that the company could focus on becoming more automated but this was generally not accepted by the board and he resigned as chief strategy officer, Mr Rogers remained on the board until February 2018 following a disagreement with the board concerning its business plan for Pledge."
After exiting again in February of 2018, Rogers tells the court that artists began to contact him saying that they were not getting paid by Pledge. To help, Rogers says that he tried to meet with the board, but that did not happen until January of 2019.
While Rogers was in discussions with the board about implementing his "pivot plan," an unnamed article, presumably by Bob Lefsetz, was published about an unnamed artist (Fastball) not receiving payment. "As a result of this, Mr. Rogers suggested that the company release a statement announcing the pivot plan and explaining that all future funds would be held in an escrow account and a repayment plan would be arranged with existing artists."
"However this did not proceed and Mr. Rogers then concentrated on trying to help Pledge secure a buyer." When no buyer was found, PledgeMusic sought court protection and ended all operations.
Where Was The Board Of Directors?
The court has interviewed recent members of the board including Daniel Rowe, Russell Rieger, David Walsh and former Columbia Records top executive Donald lenner who all confirmed Rogers' narrative.
They all also claimed that they were not involved in the day to day running of the company and that, seemingly oblivious to a firestorm of unfavorable press, "the company continued to operate as previously."
Correction: We failed to make the conversion from $7.4 million GBP to USD. The correct PledgeMusic debt is $9.57 million USD.