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A Delaware court has blocked the sale of Napster to its chief sponsor Bertelsmann.

The German media giant says it will accept the decision, which means that Napster is now effectively dead. The once mighty P2P music-sharing service, already operating under Chapter 11, issued severance notices yesterdat to all 42 employees, including founder Shawn Fanning. The most likely prospect is now a liquidation under US Chapter 7 provision.

Napster's death has looked increasingly inevitable - several newspapers and wires on Monday reported Bertelsmann's desire to extricate itself from an ambitious and expensive Internet strategy, formulated by ex-CEO Thomas Middelhoff. Yesterday the company confirmed that it had put BOL, its wholly-owned online books retailer, up for sale (but it says its keeping its stake in barnesandnoble.com)

The Delaware Court's decision means that Bertelsmann saves itself $8m or so - its offer to take full ownership of Napster. Remember it has already supported the company to the tune of $85m.

But it's the other record companies what killed Napster. Their anti-piracy litigation saw Napster's live service shut down in July last year. Continued litigation ensured that the service did not re-open. And now objections to the Delaware Court over Napster's sale, citing "citing a reticence on the German media giant's part to turn over documents related to the loans and relationships between Napster and Bertelsmann", according to this AP report. ®

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