Scour seeks bankruptcy protection

US file swapping website Scour has filed for bankruptcy protection, barely three months after it was hit with music and film copyright infringement lawsuits.

Scour president Dan Rodrigues said the site would continue to operate after having secured protection from bankruptcy under Chapter 11 of the US Bankruptcy Code.

"We took this step in order to preserve Scour's future," he said. "The Chapter 11 process will also provide our management and board of directors with adequate time to review and develop recapitalisation and restructuring alternatives to strengthen and improve Scour's business position."

Scour, whose backers include former Disney president and agent Michael Ovitz, is facing at least two lawsuits and last month laid off most of its 70 employees. By filing for bankruptcy protection, pending litigation by the Motion Picture Association of America and the Recording Industry Association of America will be put on hold. The two industry groups sued Scour for alleged copyright violations in July.

The stay of all pending litigation allows the company to continue evaluating "various strategic business alliances and alternatives", said Scour officials.

Scour was created in 1997 by a group of students who established an online system for finding multimedia files. Ovitz and investment firm, the Yucaipa Company, gained a majority stake in Scour in 1999.

The unauthorised distribution of copyright works from major record labels appears to be the main concern behind the industry's anger toward Scour and fellow file swapping service Napster.

Both sites allow people to search other people's hard drives for music files to download. Although Scour's file sharing technology is similar to Napster's, it also includes swapping of films, photographs and other digital images.