Australian music company Blue Pie Records facing liquidation over unpaid tax debt as new revelations emerge about government grant

There’s been a twist in the case of an Aussie record label led by a director with a criminal conviction, which is facing the possibility of being ordered to go into liquidation.

EXCLUSIVE

An Australian music company led by a director with a criminal conviction has been spared from going into liquidation, for now.

News.com.au previously reported that NSW-based music company, Blue Pie Records, with offices in Australia and the US, had landed itself in hot water over claims from musicians that the record label had used their music without their knowledge or permission.

Blue Pie Records denied this, saying in some cases mistakes had been made while in others they still had the rights to the music.

A subsidiary of the business, called Blue Zebra Digital and which traded under the names Blue Pie Records, Blue Pie Productions, Planet Blue Pictures and Ordior, appeared in the Federal Court on Friday over an unpaid tax debt of more than $200,000.

The company’s sole director, Damien Reilly, has previously told news.com.au he plans to pay back the Australian Taxation Office in full and is negotiating a payment plan, while also hiring lawyers to fight the case.

Mr Reilly said that no staff had been impacted by the company’s debt and that all superannuation is up to date.

“Importantly, the ATO is the sole creditor, as all other creditors have been paid out in full,” he said.

The Federal Court adjourned the Blue Zebra Digital winding up application matter for a second time until April 12.

But the government has been left with egg on its face, as it’s emerged that Blue Pie Records has been the recipient of a number of taxpayer funded grants despite its current tax deficit.

Now, a government department responsible for handing over a hefty amount of grant money has indicated it is a creditor in the winding up proceeding.

Blue Pie Records’ sole director, Damien Reilly.

Damien Reilly said he intends to pay back the tax office in full.

On Friday, a representative of Regional NSW appeared in Blue Zebra Digital’s court case and indicated they were a creditor in the matter.

The solicitor, who was representing the crown in the right of the state of NSW, acting through Regional NSW, said they had been trying to obtain court documents about Blue Zebra Digital but were having trouble doing so.

Registrar Tim Luxton ordered that they be given access to these documents.

News.com.au previously revealed that Blue Zebra Digital had received $300,000 from Regional NSW in 2021 under a round of the Regional Job Creation Fund.

Ironically, that’s more than the sum total of its current tax debt.

A more recent revelation into the decision making process behind giving Blue Zebra Digital the grant adds to the embarrassment for the government.

News.com.au understands that lawyers representing the Bon Scott estate raised concerns about the grant to Regional NSW, after Blue Pie Records claimed they had the rights to all Bon Scott’s music.

But just months later, Blue Pie was awarded the grant, even though Regional NSW was made aware of the allegations.

Blue Pie Records incorrectly claiming they hold all the exclusive rights to Bon Scott.

On the Blue Pie Records website, the company claimed in 2021 “Bon Scott is an exclusive Head Office Records & Blue Pie Records USA artist. Bon Scott is published by Blue Pie Publishing USA and Blue Pie Records”.

But the company that manages the Bon Scott estate, Sonic Rights Management, wholeheartedly rejected this claim.

“Blue Pie has never had any relationship, association or affiliation with either Bon Scott personally or his Estate,” Sonic Rights said in a statement to news.com.au.

Blue Pie Records said the exclusive rights claim was a mistake as the Blue Pie website was going through an update and it has since been corrected.

In March 2021, Sonic Rights learned Blue Pie was applying for a grant and alerted Regional NSW to the fact the company was claiming to represent Bon Scott when this was not true.

Regional NSW confirmed to news.com.au they decided to provide Blue Pie Records with $300,000 in taxpayer money in December that year, months after the complaint was made.

Blue Pie Records is currently being considered for the Export Market Development Grants Program funding from the Australian Trade and Investment Commission (Austrade).

Mr Reilly said they had already “successfully secured” this grant.

“We appreciate the support provided by government initiatives, which enables us to further contribute to the growth and success of our export endeavours and creating jobs for Australians in the media and arts sector,” he said.

Blue Pie Records on brink of collapse over $200k tax debt liquidation hearing

A previous news.com.au investigation also unearthed the tumultuous past of the Blue Pie Records group of businesses and its director, which has seen several companies collapse while it’s been revealed Mr Reilly went to jail decades ago.

In 1990, Mr Reilly was found guilty of fraudulent misappropriation of money in NSW.

He was sentenced to two years and eight months in jail.

ASIC records show that three companies that Mr Reilly ran entered into administration or liquidation in the past decade, with debts owed to the tax department in two cases.

Mr Reilly said this was a “flow-on effect” of the Global Financial Crisis.

“We barely survived it, like most of Australia,” he said. “Those businesses were never able to recover, a couple of others did.”

In 2014, a petition to bankrupt Mr Reilly was filed but was later dismissed, according to the National Personal Insolvency Index. Blue Pie Records has a number of entities including Blue Pie Records USA LLC, Blue Pie Productions USA LLC, Blue Zebra Digital, Blue Vault Digital, Blue Pie Meta Data Services, Meta Data Content Services and Ordior Meta Services.

Ann-Marita Garsed, a Norwegian musician living in the US, was unhappy with her experience with Blue Pie.

US musician Frank Rogala is also unhappy with Blue Pie Records and previously spoke to news.com.au.

A number of musicians have also claimed Blue Pie Records used their work without permission, which the company has denied.

News.com.au spoke to two artists who believed they had missed out on lucrative record deals because they claim Blue Pie Records had distributed their music without their permission or knowledge.

When they went to sign an exclusive deal with a record label, they couldn’t, because their music was already all over the internet.

Ann-Marita Garsed, a Norwegian musician living in the US, said the record label had been angry to find that her music was already on Blue Pie’s website and other distribution channels. They promptly pulled the deal.

Ms Garsed had sent Blue Pie Records one CD for one song to be used in a charity compilation, but all the CD’s songs were then all uploaded online and it took more than a decade to get it taken down.

“It’s like you’re stuck with it (Blue Pie) for life. It left a bad taste in my mouth and a lot of distrust,” Ms Garsed told news.com.au. “I’m terrified that this is going to happen again.”

Likewise, US musician Frank Rogala said he was on the brink of signing over a $7000 record deal when he looked up his music online and realised it was being distributed by Blue Pie Records.

He had to bow out of the record deal as a result.

Blue Pie Records said they had since taken the music down and apologised for what happened to Ms Garsed, while saying they never had any direct contact with Mr Rogala.

Two other musicians said they sent demo tapes to Blue Pie Records. This was only intended to provide a taster of their music but ended up on the Blue Pie Records catalogue.

“I had to change my name,” Alex Martin told news.com.au from North England.

“They were demos, they weren’t finished.”

Another artist, Phil Munro, claims he had a similar experience in the early 2000s after being asked to send through some remixes to the Aussie music company.

“Later on I found that Blue Pie had released those without my permission,” he told news.com.au.

“Anyone who listened to it would think ‘they sound like sh*t’. They weren’t meant to be for release. It’s pretty poor form.”

Blue Pie said it was unaware the artists were unhappy and encouraged them to contact the company.

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