• by Wendy Davis  @wendyndavis, April 1, 2009

Faced with crippling legal bills, music search engine SeeqPod is seeking to reorganize in bankruptcy.

The company has $2 million in assets, but $1.58 million in debt, according to the bankruptcy petition filed this week with the northern district of California.

The largest unsecured creditor is the San Francisco law firm Farella Braun + Martel, owed almost $425,000. The firm has been defending SeeqPod in a copyright infringement lawsuit brought last year by Warner Bros.

SeeqPod, based in Emeryville, Calif., also owes more than $300,000 to the Lawrence Berkeley National Lab, where the company developed its technology. Among the other unsecured creditors is research company Hitwise, owed $6,500.

In addition to the Warner Bros. lawsuit, SeeqPod also was sued by EMI last month. In both cases, the record labels allege that SeeqPod infringes copyright by enabling access to pirated music. Those cases will likely now be stayed, because filing for bankruptcy automatically suspends most lawsuits.

Before filing for bankruptcy, SeeqPod had argued in court papers that the Digital Millennium Copyright Act protected it from copyright infringement liability. That statute's safe harbor provisions say that companies that host or link to infringing material are immune from liability if they remove it in response to takedown requests. Web video company Veoh recently won a copyright lawsuit brought by adult entertainment company Io Group on that basis.

Other Web music companies have faced hard times recently. Earlier this month, ad-supported music download site SpiralFrog shut down. In February, the ad-supported streaming service Ruckus also shuttered.

Neither SeeqPod or its law firm responded to requests for comment.