The German company had agreed to pay $9m to Napster’s creditors, as the internet company has already filed for Chapter 11 bankruptcy protection.
The company is being plagued by lawsuits from the big record labels, who said Napster’s free song-swapping service infringed copyright and stopped artists from getting royalties from their work. The site was temporarily shut down last year and Napster tried to reinvent itself as a legitimate subscription online music provider.
Bertlesmann, which had wanted to relaunch Napster later this year, said it would not appeal against the Court’s decision. The German company’s chief executive Konrad Hilbers told the BBC: ‘The purchase process will not proceed,’ and Napster would be forced into ‘Chapter 7 liquidation’.
Without financing, revenues, and other potential buyers Napster, which at its height counted more than 70 million users, will be forced to shut down for good. But the days of swapping free music on the internet are not over as other file-sharing software such as Kazaa, Audiogalaxy and Morpheus continues to attract users.
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