Napster Files For Bankruptcy
Embattled online file swapping service Napster Inc. filed for Chapter 11 bankruptcy today (June 3), seeking court protection from creditors as music industry heavyweight Bertelsmann AG follows through on a plan to take over what's left of the company. Calls to a Napster spokesperson were not immediately returned.
Last month, Bertelsmann said it would buy Napster for $8 million -- slightly more than half what it had previously offered to purchase the company -- to pay Napster's creditors as part of a financial reorganization that included plans to file for bankruptcy. As of April 30, Napster had about $7.9 million in assets and about $101 million in liabilities, according to the filings made in Wilmington, Del.
The bankruptcy filing is the swan song for a company that three years ago set off a frenzy of online song-swapping that attracted millions of users, as well as the ire of the recording industry, which sued for copyright infringement. Napster has been offline since July 2001 while fighting the suits.
At its peak, Napster boasted some 60 million users and seemed at once to symbolize both the excitement of the digital revolution and the worst nightmares of the established recording industry.