Sat, Mar 31, 2001 EST
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U.S. Distribution Unit of K-tel International Files
For Bankruptcy

Associated Press
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PLYMOUTH, Minn. — K-tel International Inc. has shut down its U.S. music-distribution division and plans to liquidate it.

K-tel on Wednesday blamed the division's demise on the tough operating environment and a legal dispute with a major customer over payments due.

It said the subsidiary, K-tel International (USA) Inc., sought protection Monday under Chapter 7 of the federal bankrupcty laws in Minneapolis.

K-tel USA distributed licensed music mainly to retail record stores but has struggled through cost and staff reductions for about a year.

The parent company and outside consultants "concluded that K-tel USA was no longer viable," K-tel International said in a statement.

K-tel International Inc. and its other subsidiaries including Dominion Entertainment Inc., K-tel Entertainment (UK) Ltd., and K-tel DVD, Inc. continue their operations.

K-tel said it will focus on its operations in England — which the company said recently turned profitable — and licensing its music catalog.

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