Group Behind Music Festival Is Sued Over Failed Merger On Tuesday, 1,400 aspiring bands began to descend on New York for the 33rd annual CMJ Music Marathon. Little known to them is that the small organization behind it is facing a lawsuit of nearly $1 million over a failed merger. The case has its origins in a deal announced four years ago by CMJ and its founder, Robert K. Haber, to merge with Metropolitan Entertainment, led by the veteran New York concert promoter John Scher. The men said they had plans for CMJ tours and other joint programs, but the deal, which valued CMJ at $2.4 million, was never completed. According to a lawsuit filed by Mr. Scher in May, relations between the companies broke down. In his suit, filed in New York State Supreme Court in Manhattan, Mr. Scher says that CMJ has failed to repay nearly $600,000 in loans that Metropolitan made in 2009 and 2010 to help keep the festival afloat. With interest, that debt is now nearly $800,000, the suit says. It also seeks $99,000 in other fees as well as repayment of legal expenses. The suit further contends that CMJ fraudulently transferred its assets to another corporation to shield them from Metropolitan. In an interview on Tuesday, Mr. Scher said CMJ had also found another investor for its business. "We were going to take over a company that was habitually in the red, and make them a considerable payment, and they just decided to ignore that," Mr. Scher said. A spokeswoman for CMJ said the company would not discuss legal matters publicly. Mr. Scher said that many attempts to negotiate a settlement had failed and that CMJ's last court extension to respond to the suit passed last week. If no settlement is reached, the case could go to trial. By the standards of music industry lawsuits, $1 million is small potatoes. But for CMJ, which was founded in 1978 as a trade publication for college radio and has struggled to maintain a place in a fast-changing business, the lawsuit could be a substantial blow. CMJ's annual marathon competes with the much larger South by Southwest festival in Austin, Tex., and its magazine - now published only online - has ceded much of its influence over the independent music scene to online publications like Pitchfork. The CMJ festival continues through Saturday.