Trouble in Utopia? As firm offloads Sentric to Believe, tax debt looms and employees go unpaid in Sweden

Mattias Hjelmstedt, founder of Utopia, assumed the company's CEO role after the exit of its long-time Chief Exec, Markku Mäkeläinen, in January

Is trouble brewing at Utopia?

Today (March 30), MBW broke the news that the company had sold music publishing platform Sentric to Believe – just one year after Sentric was itself acquired by Utopia.

The sale of Sentric marks the second time this year that Utopia has offloaded a company that it previously acquired within the past 18 months: last month, Utopia sold music industry directory/data platform, ROSTR, back to its founders Mark Williamson and Adam Watson.

Meanwhile, Utopia is reportedly being sued by US music technology company SourceAudio, with the latter firm accusing the former of reneging on an agreed acquisition deal.

Adding to this story: at the top of 2023, we learned that Utopia was parting ways with long-time CEO Markku Mäkeläinen, following a round of layoffs in November that were thought to have affected 20% of the company.

Now, according to a bombshell report from Scandinavian news outlet Breakit, some Utopia employees have recently gone unpaid, while a significant tax debt – also reportedly unpaid – looms over the company in Sweden.

What’s more, MBW is hearing rumors that Utopia is currently considering a quick sale for two more of its UK-based recent acquisitions: Proper and Cinram. (A Utopia spokesperson strongly denied this suggestion.)

Breakit reports that Utopia’s Swedish company Utopia R&D Tech owes over 8 million SEK (approx $768,400) to the Kronofogden, the Swedish Authority in charge of debt collection and the enforcement of court orders in the country (i.e. the bailiff).

The report adds (translated from Swedish) that “there are a total of 19 payment orders [to Utopia from] the Bailiff, demands which have not yet become an established debt. Those requirements vary in size from a few thousand kroner up to millions”.

Additionally, three ‘bankruptcy applications’ have reportedly been directed at Utopia by employees via their trade union, Akavia, over unpaid pension premiums.

One employee told Breakit that they haven’t received their salary from the company recently, nor have received their pension premiums ‘for several months’.

Breakit estimates that round of redundancies in November impacted 20% of Utopia’s workforce.

A Utopia spokesperson told Breakit: “We sincerely apologize to all affected employees and stress that we are taking this matter very seriously. All late payments have been identified and will be resolved in the coming days”.

Breakit reports that Stockholm-based Utopia R&D Tech was previously called ISPY Group before it was bought out in 2018.

The Swedish company’s turnover, according to Breakit, was SEK 67.3 million in 2021, with an operating profit of SEK 3.6 million and a workforce of 44 people.

MBW asked Utopia for a comment about the situation with its company and employees in Sweden.

A spokesperson told us today (March 30): “Utopia has grown extremely fast in two years. Our Swedish entity alone grew 5x in employees, which is one out of several of our development offices.

“We handled more than €300 million last year, and continue to grow very fast. Now we’re adapting our organization to market shifts to ensure that we can continue to evolve our business in a sustainable manner.

“All payments mentioned in the post have already been identified and are being resolved. We have set up processes and structures to ensure that this won’t happen again.”

Utopia acquired US-based ROSTR and Austria-based music data analytics platform, ForTunes, in December 2021, paving the way for the establishment of Utopia’s Creator Services unit in 2022.

That acquisition formed part of a buying spree at Utopia in recent years, with a string of UK-based acquisitions including: physical music distributor Cinram, Absolute Label Services, Liverpool-based music publisher and publishing administration company Sentric Music Group, and UK-based distributor Proper Music Group, among many others.

In April, Ulf Zick exited his role as Managing Director, International at Universal Music Germany to join Utopia, the acquisitive Switzerland-headquartered fintech firm headed up by Markku Mäkeläinen.

Six months after joining Utopia as Chief Marketing Officer, Zick announced he was leaving the Swiss company for a job back at Universal.Music Business Worldwide

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