Kodak contemplating Chapter 11 bankruptcy

The Wall Street Journal is reporting that Eastman Kodak Co. is preparing for a Chapter 11 bankruptcy-protection filing just in case the company fails to sell a portfolio of digital-imaging patents in the next few weeks.

Kodak has been shopping the 1,100 patents around since July, the Guardian reported. They are estimated to be worth $2 billion to $3 billion.

The bankruptcy filing could happen in early February, the Wall Street Journal reported.

In November, the 131-year-old company said it could run out of cash in a year if it didn’t unload the patents, the Associated Press reported. Kodak is also facing the delisting of its shares from the New York Stock Exchange if they stay below $1 for another six months, according to the AP.

Anonymous sources told the Wall Street Journal that Kodak was having discussions with large banks such as JP Morgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. as well as potential bondholders about providing debtor-in-possession financing to keep the company going while it reorganized its business under Chapter 11 and arranged a court-supervised auction for the patents.

A Kodak spokesman told the Wall Street Journal that the company "does not comment on market rumor or speculation."

According to the Wall Street Journal:

Once a high flier, Kodak has been burning cash as it tries to transform itself from a company dependent on film sales to one built around commercial and consumer printers. The company's problems intensified in 2011, as Chief Executive Antonio Perez's strategy of using patent lawsuits and licensing deals to raise cash to fund the turnaround ran dry.

Kodak’s shares fell 18 cents, or 28.2 percent, today to close at 47 cents and continued falling after hours, the AP reported. The company’s previous trading low was 54 cents, which it hit on Sept. 30 when news came out that it had hired restructuring advisers.

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