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Camera supplier files to get merchandise back from Kodak

Rochester Business Journal
February 10, 2012

An Eastman Kodak Co. digital-camera supplier is trying to reclaim $3.4 million worth of merchandise it shipped to Kodak in December and January.
 
Taiwan-based Altek Corp. filed papers Feb. 3 in U.S. Bankruptcy Court in Manhattan, seeking an order compelling Kodak to let Altek reclaim some three dozen orders. The value of goods shipped ranged from $13.52 to $1.3 million.
 
Altek attorney Brian Lee of PivotPoint Law P.C. in Redwood, Calif., declined to comment, stating in an email that his firm lacked Altek's permission to speak.
 
A joint venture between Taiwan's largest automaker, the Yulon Group, and the China Development Industrial Bank, Altek calls itself the world's biggest manufacturer of original design digital cameras.
 
In a Feb. 3 letter to Kodak purchasing director Thomas Pryzbylowicz that was filed with the Altek motion, Altek general counsel Juliette Chan cites the U.S. Uniform Commercial Code and a section of the U.S. Bankruptcy Code as allowing suppliers to reclaim goods shipped during a 45-day window prior to a debtor's bankruptcy filing.
 
Kodak asked for Chapter 11 protection from creditors on Jan. 19. Chan's letter cites shipments invoiced from Dec. 5 to Jan. 18. The Taiwanese camera maker's bid to take back merchandise it shipped to Kodak comes despite Kodak's assurances that offshore suppliers would not be affected by its U.S. bankruptcy filing.
 
In a first-day motion that was quickly approved by the Bankruptcy Court, Kodak asked for permission to pay its foreign suppliers up to 100 percent of what they are owed for goods and services invoiced before and after Jan. 19.
 
Under the U.S. Bankruptcy Code, Chapter 11 debtors can pay suppliers less than they owe for some shipments received before the debtors file bankruptcy petitions. In a statement to its foreign suppliers issued when it filed, Kodak chairman and CEO Antonio Perez pledged to fully pay Kodak's pre-petition debts to offshore vendors. The company's first-day foreign vendor motion puts a $60 million cap on such payments.
 
Citing a company policy against speaking on matters in litigation, Kodak spokesman Christopher Veronda declined to comment.
 
Altek's Bankruptcy Court move to reclaim goods it shipped to Kodak before Kodak's bankruptcy filing comes less than a month after Kodak sued the digital camera maker in a U.S. federal court, alleging that Altek had shortchanged Kodak on royalty payments.
 
In a complaint filed Jan. 12 in U.S. District Court in Manhattan, Kodak accuses Altek of breaching a royalty agreement by failing to completely record sales of digital cameras to companies that license digital-capture technology from Kodak.
 
In the complaint, Kodak acknowledges that its contract with Altek allows Altek to forgo paying royalties on cameras it ships to other companies that have their own licensing agreements with Kodak. However, Kodak claims, Altek has not properly accounted for shipments on which it did owe royalties.
 
Altek has not yet filed an answer to Kodak's charges.

2/10/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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