NEW YORK (Reuters) - MandrakeSoft MAKE.PA , one of more popular variations of the Linux operating system to follow in the footsteps of market leader Red Hat Inc. RHAT.O , said on Wednesday it had filed for protection from its creditors.

"The liabilities accumulated by MandrakeSoft through a series of quarterly losses have prompted the company to file for 'declaration de cessation des paiements,"' the company, said in a statement on its Web site (http://www.mandrakesoft.com).

The French equivalent to what in the United States is known as Chapter 11 bankruptcy protection marks the latest failure by the open source software movement, which sees itself an alternative to software giant Microsoft MSFT.O , to develop profitable business models that can sustain such projects.

The filing took place on January 13, the company said. The company said that bankruptcy protection will give it breathing room to continue its operations. It said that Version 9.1 of its Mandrake Soft distribution will be ready in April.

A spokesman was not immediately available to comment.

Mandrake and other versions of Linux are widely referred to as "free" software, an often-misunderstood term that refers to the right of any user to copy and alter the basic software code. Finding a way to make users pay for these improvements has proved an elusive goal for "open source" proponents.

MandrakeSoft, a company founded in 1998 with the goal of making the technically sophisticated Linux "easier to use for everyone," competes with Red Hat, SuSE, Xandros, and other distributors to create a Linux for mainstream computer users.

The company said it has established headquarters in France, Canada and the United States.

Shares of MandrakeSoft were listed on the Euronext exchange in Paris. They last traded on December 17 at 2.27 euros.

Fans and critics of MandrakeSoft traded barbs on Slashdot, the software enthusiasts' online news site.

In response to several postings calling on Linux supporters to donate money to support the Linux cause, one writer complained that Mandrake and other Linux-focused companies suffered from he dubbed the "Sally Struthers" syndrome.

The reference is to a 1970s comic television actress who in recent years has been featured in late-night U.S. TV advertisements pleading for money on behalf of poor, starving children.

Other postings were kinder: "The company dies, but the software lives on. I expect that the vast majority of people who use Mandrake will have no problem moving their setup across to another distro. But imagine what would happen if a traditional, closed source company died," this writer said.

The financial setback for MandrakeSoft comes one week ahead of LinuxWorld Expo (http://www.linuxworldexpo.com), a trade show for Linux business users that will take place from January 21-24 in New York.

The conference features keynote speeches by executives from International Business Machines Corp. IBM.N , Advanced Micro Devices Inc. AMD.N , Dell Computer DELL.O , and Morgan Stanley, reflecting the growing corporate and industry support for Linux.