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Former Prince Estate Advisors Ordered to Place Millions in Commissions in Escrow

Last month the companies of Charles Koppelman and L. Londell McMillan, the former entertainment advisors to the Prince estate, were ordered to place in escrow millions of dollars in compensation they received as a result of two aborted deals they negotiated during their seven-month term. The two have appealed the decision.

An investigation recommended in December 2017 that the estate seek the return of the funds in question. Special administrator Peter Gleekel wrote, “Both have received something of value in the nature of an unjust action and are not entitled to it and under the circumstances; it would be unjust to permit them to retain it.”

The deals in question are a terminated transaction with Jobu Presents in connection with a fall 2016 tribute concert to the singer, and a January 2017 transaction with Universal Music Group that Warner Bros. Records claimed infringed upon rights that it held; that transaction was rescinded later in 2017 (a separate deal for the material was negotiated and executed by current advisor Troy Carter with Sony Music last year). Gleekel wrote that in the recorded-music deal they did not provide “anything of value that would entitle [them] to a commission” and that “it appears that the advisors did not comport themselves with the requisite care, skill and prudence called for under the circumstances.”

The total commission earned by Koppelman and McMillan on the approximately $31 million Universal deal is estimated to be around $3.1 million; court documents state the two were entitled to commissions of “ten percent (10%) on all Gross Monies (as defined herein) in connection with written contracts, amendments, extensions, additions, substitutions, replacements and modifications.” The amount of the Jobu commission is unclear.

In a statement to Variety, an attorney for Koppelman said, “The Court did not order [Koppelman’s company] C.A.K. to return its fee to the Estate, but simply provided that the funds should be placed in escrow pending the resolution of the case.  C.A.K. has appealed the Order and is confident that it ultimately will prevail on all of the issues raised in this matter, including its right to retain the fees that it earned under the terms of agreements that were expressly approved by the Court.” McMillan did not immediately respond to Variety‘s request for comment.

The pair negotiated several successful deals for the estate, including music-publishing and merchandise pacts, also with Universal, as well as performing rights.

The $31 million deal — which purportedly comprised all of Prince’s music not under contract to Warner Music as well as the contents of his much-vaunted “vault” containing thousands of unreleased recordings — was announced in February 2017 and immediately came under close scrutiny from Warner, which claimed it held the rights to some of the recordings included in the Universal deal. Sources tell Variety the main points of contention were the expiration dates of Warner’s rights to certain recordings, which are significant in the case of an artist whose commercial peak was 25 to 35 years ago. After several months of investigation and Judge Kevin Eide’s request that the parties find a way to salvage the deal, ultimately no way forward was found and the agreement was officially rescinded in July of 2017.

In response to last month’s decision, Koppelman and McMillan argued that the Estate’s decisions to return the Jobu advance and rescind the UMG agreement were “voluntary business decisions, and the current motion is an attempt to disgorge their commissions without any discovery or a fair opportunity to be heard”; they invoked a Minnesota statute addressing “the reasonableness of the compensation … [for] any attorney, auditor, investment advisor or other specialized agent or assistant.”

The court later found the statute did not directly apply to “third parties such as the Advisors,” adding, with some understatement given the unsettled state of Prince’s businesses in the wake of his death, that “the unique nature of this Estate again leads the Court into uncharted waters.”

 

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