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Napster Files For Chapter 11
The music file-sharing service has agreed to sell its assets to music-industry leader Bertelsmann AG for $8 million in cash and the assumption of certain liabilities.
June 3, 2002
1 Min Read
Napster Inc., the one-time maverick that angered recording-industry executives by setting off a frenzy of free-music swapping over the Internet, filed for Chapter 11 bankruptcy Monday. The music file-sharing service boasted 60 million users in its heyday.
Napster has agreed to sell its assets to music-industry leader Bertelsmann AG for $8 million in cash and the assumption of certain liabilities, according to papers filed in a Wilmington, Del., court. The liabilities include any new loans to Napster and forgiveness of the $91 million owed to Bertelsmann before the filing, Napster's bankruptcy lawyer Rick Cieri says. After the bankruptcy process is completed, Bertelsmann will take control of Napster, unless there's a higher bid from another company. As of April 30, Napster had $7.9 million in assets and $101 million in liabilities.
The record industry sued Napster, in Redwood City, Calif., for copyright infringement, forcing the company to shut down its service in July 2001. Since then, the five major recording companies have refused to sign licensing deals with Napster, which has been trying to build a legitimate service. Instead, record companies have launched their own services but have had little success in finding a paying audience.
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