High-resolution music technology company MQA Ltd. is entering administration in the UK, which is equivalent to bankruptcy proceedings in the US and other countries.
MQA is the company behind music technology Master Quality Authenticated, a three-part process that is applied to digital audio music recordings.
The codec, which was marketed as a way to revolutionize the compression of lossless music files, requires a licensing fee to use.
The tech was launched in December 2014 in the UK and in the US during the Consumer Electronics Show in Las Vegas in 2015.
The following year, Warner Music Group signed a long-term licensing deal with MQA. Universal Music Group became the second major to sign a licensing deal with MQA in 2017.
A slew of other licensing deals with MQA were signed in the years later including with Alibaba-owned Xiami, independent label body Merlin, music streaming company Tidal, as well as Nugs·net, HDtracks and Onkyo Music.
As of the end of 2021, MQA had 132 license agreements.
However, the company incurred a loss of £4.3 million in 2020 and again in 2021, according to a filing on the UK’s Company’s House.
While MQA’s turnover surged 43% year over year in 2021 to £657,600, the company’s administrative expenses remained at £4.5 million during the year.
The company flagged its ability to operate as a going concern in its 2021 report (published in December 2022).
“The cashflow forecasts show that further funding will be required to continue as a going concern,” MQA said in the filing.
The company’s board, with support from the group’s major shareholder, Reinet Investments, commenced a process to raise third-party funding from investors in the music industry, according to the annual report.
“In the event that such new funding is not provided, the directors have reason to believe that Reinet will continue to support the company and group, although this cannot be guaranteed. There is thus a material uncertainty which may cast significant doubt over the company’s and group’s ability to continue as going concern.”
Most recently, several news outlets reported, citing MQA, that the company has undergone a restructuring initiative.
“Following the recent positive reception to MQA’s latest technology (SCL6), there has been increased international interest in buying MQA Ltd. At the same time, MQA’s main financial backer is seeking an exit.”
“Following the recent positive reception to MQA’s latest technology (SCL6), there has been increased international interest in buying MQA Ltd. At the same time, MQA’s main financial backer is seeking an exit,” Music Ally quoted MQA as saying.
Data from the UK government’s company information service, Company’s House, shows that Reinet Investments is the only entity that has significant control over MQA.
“In order to be in the best position to pursue market opportunities and expedite this process, the company has undergone a restructuring initiative, which includes entering into administration and is comparable to Chapter 11 in the US,” MQA reportedly said.
Music Business Worldwide