A live performance from Barry Manilow, who’s filed a lawsuit against Hipgnosis over allegedly owed bonus payments. Photo Credit: Harry Wad
Hipgnosis Songs Fund (HSF) has exited the London Stock Exchange, but its story isn’t over yet. The IP-acquisition company is reportedly spearheading a multimillion-dollar complaint against Barry Manilow over bonus payments.
That High Court legal action came to light via a docket update as well as reports from outlets including the Financial Times. For a bit of quick background, Manilow was relatively early to the catalog-sale party, having sold his body of work to HSF back in August of 2020.
Of course, a whole lot has changed since then, referring in part to HSF’s sale to Blackstone, market adjustments, and shifts throughout the catalog sector itself. Furthermore, amid the songs fund’s well-documented operational woes, including a management-versus-shareholders showdown that culminated with the Blackstone deal, contractually guaranteed bonuses have been receiving little attention in 2024.
However, it’s not a secret that massive offers were integral as the company executed its song-rights landgrab. Less widely known is that many of the sizable deals at hand include clauses awarding additional cash to sellers if their catalogs meet certain commercial performance goals.
At the height of the battle for HSF, the company late last year acknowledged a total of $26.5 million in bonuses reaching six catalogs for the six months ended September 30th, 2023. Plus, two catalogs failed to hit consumption objectives that would have unlocked a cool $3.3 million.
Nevertheless, with its financial footing far from certain at the time, HSF said it’d paid a comparatively small $100,000 in bonuses during the six-month stretch, for a grand total of $68.1 million across 10 catalogs.
Another 19 catalogs had (and presumably have) clauses calling for $75.2 million in potential bonuses, though HSF said it thought them “unlikely to meet their performance hurdles.”
Separately, the revamped HSF board was “made aware” on Friday, December 15th, 2023, “of a drafting error in a contract.” Said error coincided with a “notice of the exercise of a put option contained within an acquisition contract,” elevating HSF’s “estimated liability from $4 million to $25 million.”
Hipgnosis Song Management, then at odds with HSF proper to say the least, “sought to remedy this over the subsequent weekend by way of an amendment to the contract.” And as told by the board, the situation left it with the impression that the actual liability was between $7.5 million and $8.5 million.
In short, it’s worth bearing in mind that contractual disputes and (evidently long-term) bonuses aren’t new for Hipgnosis. Precise details about the action against Barry Manilow are few and far between at present. But the complaint was filed by the company against the artist (not the other way around) on the 12th and names as defendants Manilow himself, Manilow Productions, and Stiletto Entertainment.
Moreover, Hipgnosis in a statement confirmed “a difference in understanding of certain clauses in the sale agreement regarding bonus payments” to Manilow. And according to the Financial Times, the breach of contract dispute concerns “a sum in the low single-digit millions.”
At the time of this writing, Manilow and his team hadn’t commented publicly on the matter, which has entered the media spotlight following Merck Mercuriadis’ departure from Hipgnosis.
