Vinyl Group doesn’t really do quiet weeks.For a relatively small...

Vinyl Group doesn’t really do quiet weeks.

For a relatively small company, the publisher and music platform runs an eventful business.This week, new detail of Vinyl Group’s legal battle with former Brag Media boss Luke Girgis reached the public domain; it appointed a new editor of Mediaweek; and had trading in its shares suspended by the ASX because of problems over director disclosures.

Most anticipated was Vinyl Group’s filed defence to legal action kicked off by Girgis who alleges that he was wrongly dismissed and should be entitled to a $2m performance payment.

A key function of Australia’s civil courts is to test conflicting claims and decide what’s true. The Supreme Court of NSW will have its work cut out in this case, as the claims certainly do conflict.Girgis and business partner Sam Benjamin completed the sale of Brag Media to the company now called Vinyl Group at the end of January 2024.

The price was $7.9m. But Girgis was suspended by the April and fired in early June 2024.When the sale took place, the plan had been for Girgis to go on running the publishing business. If things went well, and he achieved profit of at least $12.8m on revenue of at least $15m, he would be entitled to that $2m.

Vinyl later disclosed to the ASX that in the first five months after the deal, Brag Media had revenue of $3.3m and made a loss after tax of $1.4m. Girgis argues he was fired without cause. Vinyl said he misbehaved both before and after the sale.

A big claim made by Vinyl Group relates to Girgis’s behaviour some time before he agreed in December 2023 to selling the business. It alleges that in 2022, when Girgis was still an owner, he made “sham transactions” so that it appeared he was receiving a $440,000 salary. He allegedly did this to convince NAB to give him a home loan. There is no explanation in the filing of what damage, if any, was later caused to Vinyl Group by this alleged behaviour. That will presumably be tested in court if the case is not settled first.

The filing also alleges the Girgis failed to disclose conflicts of interest arising from his continued ownership of the relatively small talent agency Be Like Children. One of the four clients currently listed is Poppy Reid, who worked for the publishing house until September last year.The claim suggests that a $10,560 payment for work done for streaming service Stan by Reid should have gone to Vinyl Group rather than through Girgis’s agency.

The filing also suggests that the Vinyl Group email list was used to send out a series of email promotions on behalf of food service Providoor, owned by his former partner in Brag Media, Sam Benjamin. Girgis is now the CEO of Providoor.

Another issue raised in the document is that before the sale, Vinyl says Girgis gave a $90,000 job to his sister.

The filing also suggests that Girgis had disparaged Vinyl Group CEO Josh Simons to other staff, saying the board was losing confidence in him.

It will, of course, be for the court to decide the truth of these claims in the coming weeks.

Another ASX speeding ticket for Vinyl

Meanwhile, since Thursday morning, it’s been impossible to buy or sell shares in Vinyl Group, after the company went into a trading halt.

It would appear that the company has once again fallen foul of ASX rules over the disclosure of share transactions involving its directors.

A fortnight ago, Vinyl Group was ticked off over the late disclosure that director Stephen Gleddon had sold all his shares in the company.

Vinyl then filed an additional update saying that director Ben Katovsky’s spouse had sold more than half of their shares.

Last night, the company simultaneously published two further updates. It said that director Robert Gaunt had sold 2m of his 22m shares this week.

And it said that the reason for the trading halt was that “due to an administrative oversight”, the market had not been told about new shares that had been issued.

It did not make clear which shares it was referring to, although earlier in the month, the company said major shareholder Richard White had agreed to turn his convertible note (a form of loan) into shares.

Simons has previously said that the business will be profitable by the end of this year. With exactly seven months to go it will be fascinating to watch.