East­man Ko­dak Com­pa­ny, the un­prof­itable 131-year-old cam­era mak­er, is weigh­ing op­tions in­clud­ing a bank­rupt­cy fil­ing be­cause of con­cerns raised by pos­si­ble bid­ders for its patent port­fo­lio, said three peo­ple with di­rect knowl­edge of the process. The shares plunged. Some po­ten­tial buy­ers of the patents are re­luc­tant to pro­ceed with bids be­cause a pur­chase may amount to a so-called fraud­u­lent trans­fer if Ko­dak be­comes in­sol­vent, said the peo­ple, who asked not to be named be­cause the talks are pri­vate.

A num­ber of suit­ors, such as Google In­cor­po­rat­ed, have signed con­fi­den­tial­i­ty agree­ments to ex­am­ine the as­sets, said these peo­ple. If a sale were judged a fraud­u­lent trans­fer, cred­i­tors could lat­er sue for more mon­ey, said one of the peo­ple. A bank­rupt­cy fil­ing may help clear the way for the patent sale, said the peo­ple. The sale could fetch about US$3 bil­lion, ac­cord­ing to es­ti­mates from MDB Cap­i­tal Group. Ko­dak has dis­cussed its op­tions with law firms Kirk­land & El­lis LLP and Jones Day, the peo­ple said. It hasn't yet hired a firm and a fil­ing isn't im­mi­nent, they said. Lazard Ltd is ad­vis­ing Ko­dak on op­tions for the patent port­fo­lio.

"As we sit here to­day, the com­pa­ny has no in­ten­tion of fil­ing, and there is no change in our strat­e­gy to mon­e­tise our in­tel­lec­tu­al prop­er­ty," said Ger­ard Meuch­n­er, a spokesman for Ko­dak. "We're not con­cerned about fraud­u­lent con­veyance in re­gards to the sale of our IP port­fo­lio.

He de­clined to com­ment on whether the com­pa­ny had dis­cussed a po­ten­tial fil­ing with law firms, say­ing that Ko­dak is "fo­cused on the fourth quar­ter and on de­liv­er­ing on our strat­e­gy to be­come a prof­itable, sus­tain­able dig­i­tal com­pa­ny. A rep­re­sen­ta­tive from Kirk­land de­clined to com­ment. Katelin Tod­hunter-Ger­berg, a spokes­woman for Moun­tain View, Cal­i­for­nia-based Google, didn't im­me­di­ate­ly re­spond to voice­mail and e-mail mes­sages seek­ing com­ment, nor did an of­fi­cial for Jones Day. Moody's In­vestors Ser­vice cut Rochester, New York-based Ko­dak's bond rat­ings this week and in­di­cat­ed fur­ther re­duc­tions may fol­low, cit­ing "on­go­ing weak­ness in the com­pa­ny's op­er­a­tions. Ko­dak, which tapped a cred­it line ear­li­er this month, has seen its mar­ket val­ue sink by more than US$30 bil­lion from its 1997 peak.

Perez plans

Chief ex­ec­u­tive of­fi­cer An­to­nio Perez an­nounced plans in Ju­ly to ex­plore op­tions for the port­fo­lio of more than 1,100 patents, in­clud­ing some for pro­cess­ing, edit­ing and stor­ing im­ages. Perez, who took the helm in 2005, has sharp­ened Ko­dak's fo­cus on the print­ing busi­ness to help re­vive rev­enue. Sales have fall­en by half since 2005 to US$7.2 bil­lion last year, with fur­ther de­clines pre­dict­ed this year and next. The com­pa­ny's loss­es since 2008 ex­ceed US$1.76 bil­lion. Ko­dak, whose ori­gins date back to 1880, was found­ed by George East­man, who in­tro­duced the Ko­dak cam­era eight years lat­er, ac­cord­ing to the com­pa­ny's Web site. Ko­dak has shift­ed away from tra­di­tion­al film as con­sumers grav­i­tat­ed to­ward dig­i­tal cam­eras.

(Bloomberg)