Eastman Kodak is reportedly planning to file for Chapter 11 bankruptcy protection in the coming weeks after financial struggles and attempts to sell off a portfolio of more than 1,000 digital photography patents, The Wall Street Journal reported on Jan. 5, citing unnamed sources “familiar with the matter.”
The Journal said that Kodak would continue to pay its bills and operate during the bankruptcy, and would focus on selling the patents through a court-supervised auction.
Kodak would not confirm the bankruptcy reports. “We are not commenting on market rumors and speculation,” said corporate communications manager Christopher Veronda, in a Jan 6. email.
Veronda said that the pioneering photography company “has transformed to a company that has a majority of its business in the commercial printing markets.”
The Journal report prompted Moody’s to downgrade the company’s debt to a junk rating, according to Bloomberg Businessweek. Moody’s previously downgraded all of its debt ratings for the company on Sept. 27, prompted by Kodak’s decision to draw down $160 million from its $400 million secured revolving credit line, according to its latest 10-Q filing with the Securities and Exchange Commission (SEC). The company at the time had been telling investors it was working to build cash, according to the Journal report.
However, in the SEC filing, the company indicated its ability to continue as a going concern — including funding working capital, capital investments, scheduled interest and debt repayments, restructuring repayments and employee benefit plan payments and required contributions — is contingent on its ability to monetize its digital imaging patent portfolio through sale or licensing of patents, or through the issuance of additional debt.
“There is uncertainty regarding whether the company can, and the company can provide no assurance that it will, successfully execute the actions listed above,” Kodak said in the SEC filing.
Kodak also received a continued listing standards notice from the New York Stock Exchange (NYSE) indicating the company has not met its minimum share price requirement — trading below $1.00 — for 30 days or more, Kodak said in a Jan. 3 statement. Kodak has six months to rectify the situation.
“Given the liquidity challenges confronting the company and the recent market experience with our listed securities, there can be no assurance that the company will return to compliance with the NYSE listing standards,” the statement said, adding that there is potential that the company may ultimately be delisted from the exchange.
Kodak’s chief communications officer, Gerard Meuchner, has also resigned from the company, the Wall Street Journal reported Jan. 5, and in the past two weeks, three directors resigned from Kodak’s board.