The chief executive officer of embattled file-sharing company Napster has resigned, the company confirmed in a statement yesterday.

As ongoing efforts to pull the company out of its financial woes remain unsuccessful, Konrad Hilbers, who steered Napster for nearly a year, has been forced to step down.

Napster continues to battle a devastating lawsuit filed against it by the RIAA (Recording Industry Association of America), representing the major recording companies, that shut down Napster's service last year.

It has also had a rough time making deals with those labels to offer their music online. As a result, the company has indefinitely shelved its plans to launch a file-sharing service that complies with digital copyright laws.

Efforts to raise money from investors have also gone unsuccessful, the company said yesterday in a statement.

German media giant Bertelsmann, which has already poured upwards of £70m into the company, made an unsuccessful bid last month to acquire the whole of Napster.

That deal was shot down by some members of Napster's board, according to media reports, which could have been a major factor in Hilbers’ resignation.

"We deeply regret that we have not yet been able to find a funding solution that would allow Napster to launch a service to benefit artists and consumers alike," the company said in its statement.

Further efforts to cut costs are slated to take place, Napster said on Tuesday. The Wall Street Journal, citing unnamed sources, reported yesterday that Napster may be facing bankruptcy.

"We will be looking at additional steps in the coming week to further reduce expenses," the company said in its statement.