Wednesday, January 04, 2012

Once high-flying Kodak nears Ch. 11 bankruptcy filing

Kodak is about to join its once-great rival Polaroid as former photography icons that have filed for Ch. 11 bankruptcy protection. That filing could come as early as this month or early February, unless the company's efforts to sell over 1,000 patents succeeds, sources familiar with the situation have said.

Just as Polaroid did, the company badly miscalculated on digital vs. film photography.

Kodak has been trying to sell its patents, which number about 1,100 via a competitive bidding process since August. However, sales efforts have been slowed by the concerns of bidders --- apparently rightfully so --- that Kodak might seek bankruptcy protection.

If Kodak cannot sell its patents quickly enough, it would seek debtor-in-possession financing to keep the company operating while it runs an auction for the patents. Sources said that Kodak is already in discussions with several large banks including J.P. Morgan Chase, Citigroup and Wells Fargo for such financing.

The company could then re-list the patents in a court-supervised auction. Kodak could be hoping for a payout similar to Nortel Networks patent sale last year, which resulted in a sale to a consortium of companies for $4.5 billion, which turned out to be much more than initially expected.

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Those Kodak patents could prove valuable in the mobile patent war going on between Apple, Samsung, Motorola, HTC, and more: consider that today's smartphones all have digital photography technology.

As if things aren't dire enough for the company, on Tuesday Kodak revealed that it has been warned by the New York Stock Exchange that its stock could be delisted unless it does not trade higher than $1.00 over the coming half year. Kodak stock (EK) finished Wednesday at $0.47.

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