Reach Records is taking Capitol Christian Music Group (Capitol CMG) to court. A federal judge officially denied Capitol CMG’s motion to dismiss a breach-of-contract lawsuit from the Lecrae and Ben Washer-founded label. The lawsuit will head to trial in September 2027.
The dispute stems from a failed multimillion-dollar acquisition deal between Reach and the Universal Music Group (UMG) subsidiary.
How the Deal Fell Apart
Reach Records filed the lawsuit in a Tennessee federal court in late 2025 after months of buyout negotiations collapsed. According to the complaint:
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July 2025: Capitol CMG President Brad O’Donnell informed Reach that a UMG investment committee approved the acquisition.
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August 2025: Both parties signed a Letter of Intent (LOI). The agreement locked in the purchase price, stating it could only change if final due diligence uncovered “material adverse findings.”
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The Turnaround: Five rounds of due diligence passed without any negative findings. Yet right before closing, O’Donnell abruptly pulled the plug. He told Reach the price was too high based on earnings multiples and claimed the final figure lacked approval.
Reach sued for breach of contract, along with intentional and negligent misrepresentation, seeking damages for wasted resources and lost payouts.
The Judge’s Ruling
Capitol CMG argued the LOI was merely an aid for ongoing negotiations rather than a binding contract. Federal Judge Waverly Crenshaw Jr. rejected that defense entirely.
Judge Crenshaw noted that while some details were still pending, the purchase price was locked. He ruled that Reach plausibly demonstrated an enforceable contract and a clear breach.
Addressing the misrepresentation claims, Judge Crenshaw called Capitol CMG’s last-minute exit a classic tactic that caused concrete financial and operational harm to Reach Records:
“CMG’s misrepresentations caused Reach concrete injury by inducing Reach to proceed with a transaction that CMG later abandoned over a purchase price that the parties had already set.”
What’s Next
Capitol CMG failed to throw out any of Reach’s claims. The legal battle now moves to trial, tentatively scheduled for September 14, 2027.
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