Sonicblue Units Set for Bankruptcy Auction

Insolvent Sonicblue Inc. of Santa Clara, Calif., said it was unable to close a deal to sell two of its units to D&M; Holdings of Tokyo before the deadline imposed by a federal bankruptcy judge. As a result, the two units -- ReplayTV Inc., maker of a pioneering digital video recorder, and Diamond Multimedia Systems Inc., maker of the groundbreaking Rio portable digital music players -- are to be sold April 15 at a bankruptcy auction, the firms said.

D&M; had signed a non-binding letter of intent to buy the units for as much as $40 million. Crushed by debt stemming from a flurry of acquisitions, Sonicblue filed for Chapter 11 bankruptcy protection in March. It expects to auction all of its assets this month and cease operating.

The bankruptcy filing put at least a temporary halt to a lawsuit brought by the major Hollywood studios and television networks, which claimed that some ReplayTV models violated their copyrights.