UPDATED: PledgeMusic, the direct-to-fan marketplace that went out of business earlier this year, was more than $7.4 million in debt when it entered liquidation, and its receiver says it is “unlikely” that artists and others owed money by the company will be paid, according to a report from the bank-appointed receiver.

“I do not anticipate that I will need to contact you again because there is unlikely to be a payment to creditors in this case,” concludes the report from official receiver S. Rose, dated Oct. 21, 2019 and obtained by Variety. “If that changes I will contact you.”

While many of the affected artists — who found themselves on the hook for thousands of dollars when Pledge began failing to make payments last year — have threatened legal action against the company, that may be a slippery slope: In the report, the company’s board says its legal advisors “indicated that Pledge monies were not trust monies,” which means the money paid by fans belonged to Pledge, not the artists — even though the premise of the company was for it to be a conduit through which fans would pay artists for everything from albums and CDs to merchandise and even private performances.

Variety spoke with attorney Christian Castle about the situation in August, who advised artists and others owed money to hire an insolvency lawyer in the UK or, failing that, to email the Official Receiver the basics of the situation and how much they are owed. However, the prospects of receiving any money now seem grimmer than ever. As part of an article published this week unpacking the receiver’s statement, Castle asks a number of relevant questions. “Why did the board seek legal advice about whether the pledge monies were or were not trust monies? … Who gave them this advice, what prompted the board to ask for it, when did they ask for it and what happened after they got the advice? Did the lawyer also tell the board that they could tell the public they were soliciting funds for one purpose and then use the money for an entirely different purpose for their or the company’s own benefit?”

Good questions all. Castle noted to Variety that the investigation is continuing and the Insolvency Office will probably make a determination as to whether the directors can be barred from serving as directors of other UK companies in the future (although most of them are based in the U.S.).

The report also details Pledge cofounder Benji Rogers’ last-minute attempts to salvage the company, which he left early as an employee in 2017 (and as a board member early in 2018) before returning early this year as an unpaid advisor.

“Mr Rogers states that he was CEO for approximately 8 months and then the chief strategy officer until February 2017 … [and] remained on the board until February 2018 following a disagreement with the board concerning its business plan for Pledge.

“Following his resignation, Mr Rogers states that he was contacted by several artists who were owed pledge payments,” the report continues. “He states that to try and help he tried to meet with the board but this did not happen until January 2019.” It says Rogers attempted to enact a “pivot plan” and then to secure a buyer for the company, but that plan was not successful. While the report mentions a “blog article about an artist not receiving payment,” multiple such articles had been published by early this year, beginning with Variety’s in June of 2018, and the company’s reputation had fallen so far that any purchase became a non-starter, and it officially began winding up (liquidation) in June.

“The more recent members of the [PledgeMusic] board have been interviewed, including Daniel Rowe, Russell Rieger, [former Columbia Records chief] Donald lenner and David Walsh who have confirmed Mr Rogers’ statement,” the report reads. “They have also stated that they were not involved in the day to day running of the company and the company continued to operate as previously.

“The board members attribute the insolvency of the company to the commission charged being insufficient to meet its expenditure. Enquiries into the company’s affairs and reasons for its failure are continuing.”