The 131-year-old film and imaging company Eastman Kodak is preparing to file for bankruptcy should it not be able to sell of its valuable patent assets to raise capital, the Wall Street Journal (WSJ) reported.
In an article on Thursday, Kodak is said to be preparing to seek bankruptcy protection in the coming weeks, and has been talking to banks about some US$1 billion in financing to keep it afloat during bankruptcy proceedings, according to unnamed sources. This is done amid last-ditch efforts to sell off its patent portfolio to stave off that scenario, the report added.
One of the sources pointed out that a filing could come as soon as this month or early February, and Kodak would continue to pay its bills and operate normally while under bankruptcy protection. The company's focus would then be on selling off its 1,100 patents through a court-supervised auction, the sources said.
Kodak declined to comment when approached by WSJ, saying it "does not comment on market rumor or speculation".
The report noted that the company and its board have weighed up the option of filing for bankruptcy for months, as advisers told Kodak that such a move would make its patent sale easier and possibly allow the company to command a higher price. The obligation to cover pension and healthcare costs for retirees--which run to hundreds of millions of dollars each year--could also be purged, it noted, citing people familiar with the matter.
Kodak's cash fell to US$862 million, from US$1.4 billion a year earlier, according to a separate Reuters report on Wednesday. It also noted that three directors--two representatives of private equity firm KKR & Co, and a professor from the University of California--had resigned from the company's board last week.