Dissidents nab Liquid Audio board seats

A group trying to close the operations of Liquid Audio has gotten two of its representatives elected to the company's board of directors, the digital music company confirmed Tuesday.

Liquid Audio said that Seymour Holtzman and James A. Mitarotonda, the nominees of the group of investors led by MM Companies, had been elected to the board at a shareholders meeting two weeks ago.

The dissident shareholders have been battling with management over the future of the business. The MM group basically wants to liquidate the Redwood City, Calif., company and save its cash assets.

Liquid Audio recently announced plans to sell digital-encoding patents to Microsoft for $7 million in cash, and has agreed to a proposed merger with Alliance Entertainment. A representative for the company said the vote should not have any effect on either the sale or the merger.

The dissident board members had claimed victory in the election last week, but company management demanded to review the voting process. Another dissident proposal to expand the number of seats on the board did not pass.