SonicBlue, manufacturer of the Rio MP3 player, is the latest tech company to feel the pinch, filing for Chapter 11 bankruptcy and proposing to sell off the divisions responsible for its popular consumer devices.

The company plans to sell its ReplayTV and Rio product lines to D&M Holdings, parent of home-electronics makers Denon and Marantz Japan.

SonicBlue also announced a definitive agreement to sell its GoVideo business unit to Opta Systems for $12.5mn. The unit outputs DVD/VCRs, Dual-deck VCRs, and digital home-theatre systems,

The proposed deal for ReplayTV and Rio would give SonicBlue $40 million, minus up to $5 million in liabilities. Any agreements must be approved by the bankruptcy court. SonicBlue representatives said the transactions should be completed "by the end of April".

SonicBlue boss Gregory Ballard said: "SonicBlue's business units will be better able to function with better-heeled owners".

SonicBlue ran into controversy last year when a judge ordered it to devise a way to record the viewing and usage habits of customers of its ReplayTV 4000, to find out if they were illegally copying and sharing television shows and movies. The order was set aside, but SonicBlue remains under legal pressure by Hollywood firms eager to quash piracy opportunities.