Last-Minute Suitors Vie for Assets of Napster
Several last-minute bidders have said they are willing to pay millions for the assets of Napster Inc., surprising expressions of interest that may well rescue the company from liquidation.
At a hearing today, a committee of creditors is expected to ask a Wilmington, Del., bankruptcy judge to put off the planned liquidation and appoint a trustee or interim chief executive during another auction.
“The company is making substantial progress, and in view of that, we’re hopeful the court will give the parties more time,” said Carey Ramos, an attorney for songwriters and music publishers.
A Napster representative declined to comment. The dormant song-swapping firm’s CEO laid off all but two or three employees and resigned last week after the judge blocked an asset sale to German media conglomerate Bertelsmann.
The Napster creditors have been asking potential bidders to offer at least $6 million for the technology, brand name and Internet address of what was once one of the most popular services on the Internet.
“I have seen one written bid, and I am told we can expect two or three more,” said Rick Antonoff, who represents the creditors.
The identities of the most serious new suitors couldn’t be learned Thursday. Antonoff and another person briefed on the situation said the highest bid was for more than $9 million.
“They are getting serious expressions of interest,” the second person said.
The U.S. trustee had sought liquidation after the company’s employees dispersed. Since then, the creditors and Napster’s lawyers have been trying without success to get Napster shareholders to agree on a board of directors and interim leader.
Antonoff said that without that agreement, he may ask the U.S. trustee to allow Napster to stay out of Chapter 7 liquidation as long as an independent trustee is appointed as overseer.
Also Thursday, Private Media Group Inc., a publicly traded adult entertainment company based in Spain, sent a bid to the shuttered song-swapping business and offered to buy just the Napster trademark and Internet address for about $2.4 million in stock.
Executives with Barcelona-based Private Media said they want the Napster trademark and Web address to draw traffic to a peer-to-peer subscription network they are building to allow consumers to trade adult content.
Once valued by venture capital investors at more than $100 million, Napster filed for bankruptcy reorganization in June after judges ordered it shut during a copyright infringement suit by songwriters and major record labels.
Those groups later attacked the planned sale to Bertelsmann, and the judge agreed that the terms of that deal might not have been fair.
