Napster Inc., the company that started the online song-swapping craze, sought chapter 11 bankruptcy protection yesterday, according to news wire services.
The bankruptcy filing, made in Delaware, is part of a deal in which music industry giant Bertelsmann AG agreed to purchase the failing Napster for $8 million. As of April 30, Napster had $7.8 million in assets and $101 million in debt.
Napster has not been in operation since July, when it went offline amidst its fight against lawsuits by major record labels, alleging copy infringement. The company had announced its plans to stage a comeback as a royalty-paying service.
At the peak of its popularity, Napster had approximately 60 million users.