3rd October 2011
Some of the bankruptcy speculation came about because Eastman Kodak is aiming to sell many of its patents valued at around £3bn, but potential buyers are concerned that the firm may be technically insolvent. This could then mean that the patent deals represent a 'fraudulent conveyance', which would mean that creditors of a subsequently insolvent business, could sue to try and get more money from the deals.
Economic Times reports that one way to avoid legal difficulties over patents would be for Eastman Kodak to file for bankruptcy. News also broke last week that the firm had hired consultancy Jones Daley, which among other things, specialises in bankruptcy strategies. This spooked the markets further though there was some recovery this morning.
The credit markets and agencies are similarly bearish. As the Economic Times reports, credit default swaps on the firm's debt now stand at 66.5 per cent a huge premium.