Solid-state hard drive maker OCZ Technology Group Inc said it had received an offer from Toshiba Corp to buy the company in a planned bankruptcy proceeding.
OCZ shares tumbled as much as 80 percent on Wednesday after trading of the stock resumed on the Nasdaq. The stock had fallen 69 percent so far this year through Tuesday's close.
OCZ, which has a market capitalization of $43 million, said it had "substantially completed" negotiations with Toshiba on an asset purchase agreement.
The company said it expected to file a petition for bankruptcy shortly after completing final documentation with Toshiba and Hercules Technology Growth Capital Inc, one of its lenders.
OCZ, which has not posted an annual profit in five years, said if it failed to agree on a deal with Toshiba it would immediately file for bankruptcy and liquidate.
The company has been battling a shortage of NAND flash memory chips, used in solid state drives, for about a year.
Supply of NAND memory chips - used for general storage and data transfer in memory cards and solid-state drives (SSDs) - has failed to keep pace with a boom in demand from mobile device makers.
"The filing is not surprising. We had estimated that OCZ had cash for a quarter or so and didn't see any natural buyers," said Longbow Research analyst Joseph Wittine in an email to Reuters.
"(We) assumed in any asset sale or capital infusion ... shareholders would be substantially diluted at best and, very possibly, left with nothing."
The company said in August it had retained Deutsche Bank AG to help it evaluate strategic options. OCZ had also said it would amend its loan and security agreement with Hercules as the company did not meet certain covenants.
OCZ said on Wednesday it had received notices that Hercules had taken control of its depository accounts at Silicon Valley Bank and Wells Fargo Bank, National Association.
OCZ has long been considered to be a takeover target for hard drive makers such as Seagate Technology Plc and Western Digital Corp and flash memory maker Micron Technology Inc, who have been battling for a piece of the fast-growing market for solid-state drives used in servers.
Toshiba, Japan's largest chipmaker, had said earlier this year it was considering investing $200-300 million on new equipment to manufacture NAND flash memory chips.
Western Digital bought troubled SSD maker Stec Inc for $340 million in June to become one of the top players in the flash drive market.
OCZ was also hit by an investigation by U.S. regulators into its accounting practices last year.
Shares of San Jose, California-based OCZ were down 73 percent at $0.17 in late afternoon trade.
(Additional reporting by Aditya Kondalamahanty; Editing by Saumyadeb Chakrabarty)