Danka may file for Chapter 11

DANKA BUSINESS SYSTEMS, the stricken photocopier distributor, yesterday warned it might seek protection from its creditors if it could not resolve its financial and legal problems. Shares in Danka plunged 18.5p to 38p as the group disclosed in a filing with the US Securities and Exchange Commission that it might file for Chapter 11 bankruptcy if it could not resolve a legal dispute with Eastman Kodak or secure continued funding from GE Capital, the leasing giant.

Danka said it believes its fundamental businesses are sound. Its bankers have agreed to waive covenants on its loans until next February in order to give the company a chance to solve its problems.