Wed. Feb 28th, 2024

Utopia Music is facing another lawsuit over an aborted deal to buy a U.S. music technology company called SourceAudio, this time over allegations that the Swiss company violated a $400,000 settlement that aimed end the dispute.

The two companies have been battling since February, when SourceAudio filed a lawsuit claiming that Utopia – a buzzy music fintech firm – had bailed on 2022 deal to buy the smaller company for $26.5 million. The case claimed that after a year of delays, Utopia owed more than $37 million on the deal.

That case, filed in Delaware, quickly settled on confidential terms. But in a new lawsuit filed Wednesday in Los Angeles, SourceAudio says Utopia has now flaked on that agreement, too.

“Desperate to get the Delaware litigation out of the public eye, Utopia negotiated an agreement to pay SourceAudio $400,000 in exchange for a full release and dismissal of the lawsuit,” the company’s lawyers write. “But as with the underlying contract, Utopia has refused to pay what it owes.”

According to the new lawsuit, just days after signing the legal settlement, Utopia “failed to make the required settlement payment—with no explanation at all.”

“It now appears that the settlement was simply a ruse by Utopia to buy time and avoid paying its debts,” the smaller company’s lawyers write. “SourceAudio brings this action to collect what it is owed [or] to rescind the fraudulently procured settlement agreement. Utopia’s gameplaying must come to an end.”

A spokesman for Utopia did not immediately return a request for comment on Thursday.

Utopia, a Swiss-based tech company that delivers financial services for labels, publishers and distributors, had been on a buying spree over 2021 and 2022. The company has acquired at least 15 companies, including music tech company Musimap, U.K. physical distributor Cinram Novum and Lyric Financial, a provider of royalty-backed cash advances.

But last fall, news broke that Utopia would restructure operations and lay off 20% of its workforce, representing about 230 jobs. In April, the company undertook a fresh round of job cuts, eliminating another 15% of its global workforce. Then in July, Utopia announced it was closing its research and development offices in the United Kingdom and Finland, resulting in the loss of another 5% of its global workforce.

SourceAudio — a tech platform for digital asset management and monetization — sued in February, claiming it had struck a deal in March 2022 to sell itself to Utopia for $26.5 million. Since almost immediately after the deal was reached, SourceAudio claimed, the bigger company had continually balked at actually completing the purchase.

“Despite repeated assurances that Utopia would be able to close…, Utopia engaged in a pattern of discontinuing discussions for an extended period of time, only to resurface immediately before the next intended closing date to indicate that it was unable to close by such date,” the complaint read.

In Wednesday’s new lawsuit, SourceAudio claims that Utopia quickly agreed to pay $400,000 to end the earlier case. Though Utopia made an initial $50,000 payment under the deal, the lawsuit claims, the remaining $350,000 – due this month – has not been paid.

“Defendants fraudulently represented through their attorney that they would perform the settlement agreement, while never intending to make any payment beyond the first installment of $50,000,” The company wrote. “Defendants’ objective with its false promise was to secure a release and dismissal of the Delaware action in exchange for a $50,000 payment and nothing further.”

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The post Utopia Music Sued Again Over Aborted $26M Deal to Buy U.S. Tech Firm SourceAudio appeared first on WorldNewsEra.

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