The financial problems of Proper Group, the company formerly known as Utopia Music, continued this week as a court in Switzerland initiated bankruptcy proceedings against the company over an unpaid legal bill.
Proper says the bankruptcy case was brought by MME Legal, a law firm to which the music company owed CHF 23,000 (approx. USD $27,000).
The music company says it was unaware that Zug-based MME Legal had launched legal proceedings against it. As a result, it missed a court hearing on Tuesday, triggering the court’s bankruptcy proceeding.
In a statement issued on Thursday (September 26), Proper said it had settled the debt to MME Legal in full and plans to launch an appeal to halt the proceedings.
“We are disappointed that bankruptcy proceedings have been triggered. Our company was unfortunately unaware that legal proceedings over a minor debt were taking place, and as a result we were not represented at the court hearing,” a Proper spokesperson said in a statement.
“Our debt has now been settled and we are of course appealing this decision.”
Swiss-born Proper Group has experienced a series of financial crises over the past few years, after a high-profile and aggressive acquisition spree began to take a toll on the company.
In 2023, there were reports that company staff in Sweden were going unpaid.
Earlier this year, a US court ordered the company to pay $1.9 million to the former owners of Lyric Financial, a music financing platform that Proper (at the time called Utopia) had acquired in 2021. An arbitration panel found that Proper had failed to make the last installment payment on the acquisition.
“Recent positive developments in the business have placed us on track to near-term cash flow positivity, with clear prospects of profitability by 2025.”
Proper Group
The financial problems follow an aggressive shopping spree that saw Utopia buy such firms as Quincy Jones-backed Musimap, UK warehouse and fulfillment firm Cinram Novum, publisher Sentric Music Group, Absolute Label Services and Absolute Rights Management, and Proper Music Group, the UK-based company after which Utopia renamed itself.
But signs of financial trouble at the company were not long in coming. Starting in late 2022, the company initiated a series of mass layoffs, and quickly began unloading many of the assets it had amassed, including Sentric, Absolute, and ROSTR.
Complete Music Update reports that the missed court date this week was the result of understaffing at the company, following the layoffs.
Amid the fire sale, the company has repeatedly asked its shareholders for additional cash injections. Nonetheless, the company says it’s on the right track and expects to reach profitability next year.
“Recent positive developments in the business have placed us on track to near-term cash flow positivity, with clear prospects of profitability by 2025, so we expect to reach a favorable outcome,” a spokesperson said on Thursday.Music Business Worldwide