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CMJ Facing $1 Million Lawsuit

CMJ-2013The 33rd annual CMJ Music Marathon began in New York on Tuesday, and while the 1,400 bands and countless fans have been enjoying the festival, the organization behind it has been facing a lawsuit over a failed merger, The New York Times reports.

Four years ago, CMJ and its founder, Robert K. Haber, made a deal to merge with Metropolitan Entertainment, which is led by big-time concert promoter John Scher. As a part of the deal, which valued CMJ at $2.4 million, the two companies were supposed to produce CMJ tours and various other joint programs, but the deal was never completed. Scher says that CMJ has not repaid the nearly $600,000 in loans that Metropolitan gave it in 2009 and 2010 to keep the festival going. Metropolitan says that with interest, the debt has risen to nearly $800,000. Metropolitan is also seeking $99,000 in other fees. Metropolitan claims that CMJ fraudulently transferred its assets to another corporation and found another investor for its business.

“We were going to take over a company that was habitually in the red and make them a considerable payment, and they just decided to ignore that,” Scher said. According to Scher, Metropolitan’s numerous attempts to figure out a settlement with CMJ failed and CMJ’s last court extension to respond to the hefty lawsuit was last week. If the two companies do not come to a settlement, the case could go to trial. If CMJ goes to trial and loses the case, it could be a very substantial blow to the perpetually struggling company.

A CMJ spokesperson said the company would not publicly discuss legal matters. 

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