Following a report in the financial paper the Wall Street Journal that film and camera company Kodak was seeking legal counsel regarding restructuring, shares of the brand went into free-fall on Friday.
At the closing bell, Kodak shares had fallen 54% in the day’s trading, losing 91 cents to close the day at 78 cents. However, the company insisted it had no intentions of filing for bankruptcy in coming days, according to the WSJ :
After markets closed, Kodak issued a press release confirming it had hired Jones Day and said it was “committed to meeting all of its obligations and has no intention of filing for bankruptcy.” Kodak said it was exploring all its options.
SFGate.com cites three unidentified sources as saying the company is weighing options including bankruptcy after several unprofitable years, despite the company’s assertion it will return to profitability in 2012. One of the reasons Kodak is said to be considering the option is sale of digital patents- in which it has engaged in order to stay solvent. While bidders are interested in the patents, there is concern about the validity of sale in the event of a default and the potential for what is known as a “fraudulent transfer.”
A Kodak spokesman waved away patent portfolio sale concerns earlier this week:
“As we sit here today, the company has no intention of filing, and there is no change in our strategy to monetize our intellectual property,” Gerard Meuchner, a spokesman for Kodak, said yesterday. “We’re not concerned about fraudulent conveyance in regards to the sale of our IP portfolio.”
However, default looms larger with news that Moody’s and Fitch have downgraded Kodak’s rating from CC to CCC, signifying “that default of some kind appears probable.”
