Napster wins $5m reprieve

Napster appears to have secured its future after winning approval for a $5.13m debtor-in-possession agreement with German prospective buyer Bertelsmann AG.

The controversial internet music swapshop, which filed for Chapter 11 bankruptcy protection earlier this month and has been unable to operate since July last year, said that it would use $4m of the money to prop up its business operations.

The rest will be used in a staff retention fund, the company said. The loan includes $250,000 to pay off administrative costs.

Napster must obtain a court order approving the sale by the end of July in accordance with its takeover deal with Bertelsmann.

The company said that it will pay interest of eight per cent on the loan that runs until 30 August or the completion, or termination, of the sale, depending which comes first.