Kodak Readying Chapter 11 Filing as Precaution

Posted by at 2:35 pm on January 4, 2012

Kodak is drafting Chapter 11 bankruptcy filings in the event it can’t sell patents in the next few weeks, insiders asserted Wednesday. The proposed plan seen by the Wall Street Journal would see the camera legend possibly enter bankruptcy later this month or in early February. The reorganization would see it get $1 billion of debtor-in-possession funding and sell its entire library of 1,100 patents through a bankruptcy auction rather than a typical process.

Citigroup, JPMorgan Chase, and Wells Fargo are said in the talks along with bondholders. Proxy talks with a third-party financing group, through Cerberus Capital Management, were also reportedly underway.

Bankruptcy could be partly deliberate and an advantage for Kodak. A lack of patent sales in the past few months has been partly blamed on buyers having jitters over Kodak going bankrupt. Along with that certainty, it could force bidders to publicly outline their bids. Some health care and retirement payouts might also go away, saving hundreds of millions of dollars from when the company was much larger.

Steps have already been taken to sell off its image sensor business and has warned that it might delist from the NYSE.

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