Napster Is Denied Proposed Sale
Sep 3, 2002 12:00 PM, Editors
A Delaware bankruptcy court today has denied the bankrupt, Redwood City, Calif.-based Napster its $92 million proposed sale to Bertelsmann AG.
Chief Judge Peter J. Walsh of the U.S. Bankruptcy Court in Wilmington refused to allow the sale after Bertelsmann could not come up with enough evidence to show that its investment was made in good faith and not as an equity stake in Napster.
Blocking the sale means that currently offline Napster does not have any revenue streams and there does not seem to be any other buyers present. The company said that it would most likely be forced into Chapter 7 liquidation. "Napster is disappointed with the bankruptcy court's decision not to approve the sale of the company's assets to Bertelsmann," Napster CEO Konrad Hilbers issued in a statement. "As with most start-up technology businesses, Napster's technology is of little value without the talented team that created it, so it is an occasion of loss on many levels."
Napster CFO Carolyn Jensen was quoted Friday as saying that the company would terminate its employees and cease operations if the bankruptcy court failed to approve the sale.
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