US imaging-software company ScanSoft paid around $39.5 million for the bulk of the assets of fallen Belgian software developer Lernout & Hauspie Speech Products (L&H) in an auction held in New York earlier this week.

ScanSoft acquired the major portion of L&H's core speech and language technology business – including the text-to-speech and speech-recognition engines, and the Dragon NaturallySpeaking product line – ScanSoft and L&H said.

The winning bid comprises $10 million in cash, a $3.5 million promissory note (a promise to pay the money) and $26 million in ScanSoft stock. ScanSoft will retain at least 150 (of 450) L&H employees.

Second time The founders of Dragon Systems, James and Janet Baker, acquired L&H's audio search engine technology assets, which they helped develop. They paid $750,000 through a new company called Dragon Catalyst, L&H said. They had previously sold their company to L&H for $460 million of now-worthless L&H stock.

Of the remnants, speech-recognition products that were part of the Interactive Systems Incorporated (ISI) division were bought by Multimodal Technologies, while L&H's Intelligent Content Management and Knexys divisions were acquired by Vantage Technology Holding.

The sales are subject to final approval by the US Delawere District's Bankruptcy Court and the commercial court in Ieper, Belgium.