UPDATED: While PledgeMusic’s long-expected official move into administration — the British equivalent of bankruptcy — was rumored to take place today, instead the deputy CEO of the trade organization UK Music called on the government to take urgent action to investigate the troubled company and prevent a similar situation from happening.
PledgeMusic, a direct-to-fan marketplace for musicians, made a long-expected move toward administration in May, owing thousands of musicians money for unfulfilled campaigns. It is estimated to owe between $1 million and $3 million to artists; Variety was the first to report the company’s legal troubles, and in subsequent articles detailed how artists of all stripes were being impacted. The company’s website went offline late last week, although an update was posted on Friday:
“A winding up order was made against Pledgemusic.com Limited in the High Court of Justice on 31 July 2019,” it reads. “As a result of the making of the order, the Official Receiver becomes liquidator of the company. Any enquiries should be forwarded to LondonB.OR@insolvency.gov.uk, quoting reference LQD5671373.”
A hearing to wind down the company was held at the Royal Courts of Justice in London today. According to Music Week, in a letter to Business Minister Kelly Tolhurst, UK Music’s Tom Kiehl said, “Many musicians across the UK relied on crowdfunding website PledgeMusic to deliver payments from patrons, to pay for album recordings and other costs. The winding up of this company represents an entirely unsatisfactory development for the many music fans and creators who have invested so much into projects through this scheme.
“I ask you to again consider the merits of a ministerial referral to the Competition and Markets Authority to investigate what went wrong with this case. I would also like to ask you to consider taking up the case with the Financial Conduct Authority, which holds responsibility for regulating certain types of crowdfunding, to consider the activities of PledgeMusic and whether there have been any regulatory breaches.
He concluded, “Furthermore, I would like to ask for a meeting with you to consider further possible Government interventions to ensure the issues which have arisen from PledgeMusic can never happen again.”
Cofounder Benji Rogers, who left Pledge in 2016 when it was thriving, and returned early this year in an ultimately futile attempt to sell it, posted a note on the situation Wednesday on Medium. “I wanted to let you know that my volunteer role at PledgeMusic has officially ended now that the company has been filed with the court in the UK. This means that a judge made the order for liquidation of the company this morning and that the company’s affairs will be turned over to the Official Receiver and that the directors who were running the company no longer have power to act on behalf of the company.
“This was not the route that I personally wanted for PledgeMusic and I wanted you to know that the last line of the many options that I had to get a sale of the company in administration, was cut on the evening of the 28th of July by text,” he continued. “This was the last viable option that I personally had after all previous attempts failed. … I will look to get next steps put on the website as soon as I have them from the Official Receiver and am once again deeply sorry that I couldn’t pull off a sale which was always the preferred and best path for all involved.”
A source told Variety in May that artists can apply to become official creditors when administrator is named. Once the company goes into administration, its assets presumably will be sold off to the highest bidders, but it seems unlikely that there will be enough money to cover the entire amount owed to artists — in short, many artists probably never will receive the money that is owed to them. The assets were detailed in a leaked letter from a company that may be its administrator.