Judge Approves $200,000 Loan to Napster

By | October 22, 2002 at 12:00 AM

A Delaware bankruptcy judge on Monday approved a $200,000 loan to Napster, the failed online song-swapping service, from a company called Napco Acquisition to keep the company afloat until the sale of its assets is completed, according to court filings.

Napco also signed a letter of intent to buy some of Napster’s assets, the court papers said. Napco attorney Suzzanne Uhland at O’Melveny & Myers could not be immediately reached for comment.

Dozens of bidders have expressed interest in buying the assets of the bankrupt online music-swapping site in recent months.

Rick Antonoff, attorney for Napster’s creditors committee, told the Los Angeles Times a final agreement to sell Napster’s assets to the new bidder could be reached in two weeks, when the buyer will be identified.

Preliminary terms call for the bidder to pay $5 million in cash and an undisclosed amount of other consideration to Napster’s creditors in exchange for some of the Redwood City, California-based company’s assets, Antonoff told the paper.

The former file-sharing service, which closed its operations in September, reached a deal late that month with the U.S. Trustee’s office for the appointment of a Chapter 11 trustee to manage its estate.

Napster attracted some 60 million users at its peak, but lost a legal showdown with the world’s largest record companies, which accused the company of copyright infringement. The company filed for bankruptcy earlier this year.

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