Chicago Business Litigation Lawyer Blog
There are countless stories of a rock band’s members fighting over music and money, but this time it’s the widow of a band’s recently deceased member who’s fighting with the remaining members of the band over the band’s value.
When the singer Chris Cornell died, his widow, Vicky Cornell, inherited his share of the interest in the band, Soundgarden. The other members have offered to buy Cornell’s share for $278,000, but she alleges that amount represents just a fraction of what her share in the band is worth.
Cornell is suing the remaining members of Soundgarden for allegedly devaluing her share in the band, and has asked a judge to decide on an appropriate buyout price based on the value of Soundgarden’s master recordings. Additionally, Cornell is also asking the court to factor in the potential for future sales, including merchandise, tours, and even new music that could be created with artificial intelligence using extant recordings of Chris Cornell’s vocals.
A representative for Soundgarden said the remaining members of the band have acted in good faith in trying to buy out Cornell’s share of interest in the band. The amount they offered was allegedly based on the value of the band as estimated by Gary Cohen, a valuation expert who they claim is highly regarded and respected in the music industry. In trying to settle their disputes with Cornell, the surviving members of the band have allegedly offered to pay Cohen’s estimated value several times over. They say it’s about their music and their legacy, not about the money. But Cornell tells a different story.
According to the lawsuit, the band has refused to give Cornell access to financial documents that would enable her to accurately estimate the value of her interest in the band. Instead, Cornell is left to guess at the band’s value based on other indications. For example, the royalties she received in 2018 for the master recordings of Soundgarden’s songs (not including publishing royalties) were allegedly significantly more than the $278,000 they offered to pay her for all of her interest in the band.
A third party allegedly offered to buy the band’s catalog of recorded music for $16 million, which is another fact Cornell points to when accusing the surviving members of Soundgarden of severely undervaluing the band in offering to buy her out.
Cornell said she offered to buy out the surviving members of Soundgarden for $12 million ($4 million each), but they refused that offer. She then offered $21 million ($7 million each), but they refused that offer as well, which Cornell uses as evidence to suggest they value their shares in the band in the millions, rather than in the hundreds of thousands.
Cornell’s lawsuit alleges the system Soundgarden used to value her interest in the band was inconsistent with standards in the music industry, and that it was full of methodological flaws, including discounting partnership assets. The lawsuit also claims the value provided by the band failed to take into account the fact that, when a prominent member of a music band dies, the band’s overall value tends to increase.
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