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Scour To Axe File-Sharing, Goes On Block

When they butcher a hog, they make use of every scrap. In the aftermath of the dismembering and repurposing of Napster and Napster-like file-sharing services, the scraps are on the block.

One of them, Scour, Inc., has just announced it will shut down the Scour Exchange community within 48 hours to facilitate a resolution of pending litigation and a sale of its assets in the U.S. Bankruptcy Court. Scour, Inc. filed for Chapter 11 bankruptcy protection on October 12, 2000, seeking protection from its creditors.

The announcement came after the U.S. Bankruptcy Court granted the company's motion to disable the file-sharing application.

"We believe our unilateral decision to take down the Exchange will facilitate a resolution of the copyright infringement litigation pending against Scour. In addition, we expect the shutdown of the Exchange to facilitate a sale of Scour's assets, which will maximize creditor recovery," said Dan Rodrigues, president of Scour.

Listen.com offered Nov. 1 to purchase Scour for $5 million and 527,918 shares of Listen.com stock. The Listen.com proposal was supported by Scour's board and management.

However, CenterSpan Communications Corp. has now announced its intent to submit a bid for Scour's assets. If CenterSpan is the winning bidder, it plans to re-launch Scour Exchange in the first quarter of 2001 as a secure and legal digital distribution channel based on CenterSpan's new technology platform.

"The acquisition of Scour's assets, including the brand, user community, Web site, knowledge capital and technology, will help accelerate the delivery of our digital distribution channel. And while our bid will be structured as an asset acquisition to avoid contingent liabilities, internally we view Scour as very strategic and want the Scour founders and employees to join our team," stated Frank G. Hausmann, CenterSpan's Chairman and CEO. "We have been working with peer-to-peer architecture for over two years and believe our new secure and legal solution will be the technology platform of choice for major content owners."

But like Yogi Berra said, "it ain't over 'til it's over." Theres still time to get a bid in. According to a procedure and calendar established by the court, interested parties must deposit $500,000 with Scour's legal counsel no later than Dec. 5 to qualify as a bidder. The successful bidder will be determined at the final sales proceeding scheduled for Dec. 12.

Got a better use for scraps? Call the company's bankruptcy counsel, Paul M. Brent of Steinberg, Nutter & Brent at (310) 451-9714 and put in your bid.