UPDATE 1-Radio network Air America is bankrupt, to dissolve

* Air America files Chapter 7, winding down business

* On-air talent included Al Franken, Rachel Maddow

BANGALORE Feb 3 (Reuters) - Air America, the talk radio network whose on-air talent once included now U.S. Senator Al Franken and MSNBC host Rachel Maddow, filed for bankruptcy protection on Wednesday and plans to liquidate.

The Chapter 7 filing in Manhattan bankruptcy court came after Air America on Jan. 21 announced plans to wind down operations following a decline in advertising and an inability to attract new investors. It subsequently went off the air.

The firm had struggled under a series of management changes since its inception in 2004. It previously filed for bankruptcy in 2006 after debt talks with one of its earliest creditors broke down, but it remained on the air.

Air America once had about 100 radio outlets across the United States. It reported assets of $1.5 million and debt of $17.2 million in its bankruptcy petition.

Franken stopped broadcasting on Air America in 2007, and is now a Democratic senator from Minnesota. Maddow now hosts a prime-time show on MSNBC television.

The case is In re: Air America Media LLC, U.S. Bankruptcy Court, Southern District of New York, No. 10-10615. (Reporting by Santosh Nadgir in Bangalore, editing by Gerald E. McCormick)