Record Labels' Bankruptcy Hurts Artists Again and Again

by Tamera H. Bennett My good buddy attorney Craig Barker is hard at work in Austin supporting the rights of recording artists. Craig has worked tirelessly to secure royalty payments for the Don Walser family on masters Mr. Walser recorded under contract with Watermelon Records.

Here is a very brief history of the Watermelon Records bankruptcy debacle with some links out to fill in the blanks.

1989 - Watermelon Records founded in Austin, Texas 1994 - Don Walser enters into an exclusive recording agreement with Watermelon. 1996 - Watermelon begins having financial difficulty. Gets a large cash infusion from Sire/Warner by entering into a distribution agreement with Sire/Warner in 1997 that includes uplifting 2 artists – Don Walser and the Derailers – into the Warner system 1998 - Watermelon files for bankruptcy because their distribution deal with Sire went south. 2001 - Texas Clef, Inc. acquires Watermelon's assets out of bankruptcy and assigns the assets to Texas Music Group, Inc.. The rub for many is that one of the owners of Texas Clef/Texas Music Group, Inc. was also an owner of Watermelon. 2004 - Walser sues on breach of contract and breach of fiduciary duty because he received nominal accountings and royalty payments. 2006 - Walser passes away. 2008 - Walser's wife passes away and their son takes over as plaintiff in the lawsuit. November 2008 - case is set for depositions with trial to start in December 2008. November 18, 2008 - Texas Music Group, Inc., Texas Clef, Inc. and Antone's Records file bankruptcy which stays Walser's lawsuit.

Here is a great article from 2000 in the Austin Chronicle setting out the history of Watermelon Records and its ownership.

This is what Austin360 has to say currently.

Pasted below is the press release issued by attorney Craig Barker.

PRESS RELEASE Corporate defendants Antone’s Records, Inc, Texas Music Group, Inc., and Texas Clef Entertainment Group, Inc., file for bankruptcy

Last night (Nov. 18, 2008), facing depositions of two of its principals’ depositions today and trial in 13 days (on Dec. 1) for charges of fraud, breach of fiduciary duty, and breach of contract, and exposure to punitive damages and return of the masters to the heirs and the Estate of Don Walser, the three corporate defendants filed for Chapter 11 bankruptcy protection, staying the proceedings in state court. The three individuals sued, Randolph W. Clendenen, Heinz Geissler, and James W. Heldt, have not filed for bankruptcy protection at this time. A central component of the plaintiffs’ allegations is the piercing of the veils of the three corporations. The Walser heirs are saddened by this turn of events where the individuals behind the corporate shells continue to exploit their fathers’ work for financial gain -- and that of the many other legendary Austin and Texas artists -- while avoiding paying the artists monies they are owed by hiding behind the undercapitalized corporate forms. While it is too soon to tell at this point, the Walser family hopes that the lawsuit against the non-corporate individual defendants can quickly be severed away from the bankrupt entities, as it has been the family’s contention from the inception of the lawsuit that the individuals are at fault and using the corporate shells to avoid responsibility. The Walser family extends its sympathies to the other artists and songwriters and their families who have likewise not received the contractually required accounting statements nor monies owed them by the defendants in this case. The Walsers and their attorneys vow to fight on until justice is done.

The Walsers are represented by Broadus A. Spivey and Craig Barker. Spivey is a past president of the State Bar of Texas, Texas Trial Lawyers Association, and the International Academy of Trial Lawyers, and he is a fan of great country musicians like Don Walser. Barker is the immediate past chair of the Entertainment and Sports Law Section of the State Bar of Texas, an adjunct professor of entertainment law, and a local music lawyer. Spivey can be reached at 474-6061 and bas at spivey-law dot com.  Barker can be reached at 494-0777 and craig at craigbarkerlaw dot com .

The debtor corporations are represented in bankruptcy by Stephen W. Sather of Barron & Newburger, P.C. in Austin.

Defendants Clendenen, Heldt, Texas Music Group, Inc., and Antone’s Records, Inc., are represented in the Walser lawsuit by William Davidson of Chamberlain McHaney in Austin. Defendant Texas Clef Entertainment Group, Inc., is represented in the lawsuit by Wade Porter of Allensworth and Porter in Austin. Mr. Porter also corepresents Defendant Heldt in the lawsuit.