Eastman Kodak Co. shortly after 1 a.m. Thursday announced it had filed for bankruptcy.
Kodak and its U.S. subsidiaries filed voluntary petitions for Chapter 11 business reorganization in the U.S. Bankruptcy Court for the Southern District of New York. Kodak expects to complete the restructuring during 2013. (Read the bankruptcy filing .)
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The move, which had been speculated about since last fall, aims to bolster liquidity, monetize nonstrategic intellectual property, fairly resolve legacy liabilities and enable the company to focus on its most valuable business lines, Kodak said.
The company has obtained a $950 million debtor‐in‐possession credit facility with an 18‐month maturity from Citigroup Inc. to enhance liquidity and working capital.
Kodak said it believes it has sufficient liquidity to operate its business during Chapter 11, and to continue the flow of goods and services to its customers.
Kodak also expects to pay employee wages and benefits and continue customer programs. Subsidiaries outside of the U.S. are not subject to proceedings, the company said.
“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Antonio Perez, chairman and CEO. “At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our work force by 47,000 since 2003.
“Now we must complete the transformation by further addressing our cost structure and effectively monetizing non‐core IP assets. We look forward to working with our stakeholders to emerge a lean, world‐class, digital imaging and materials science company.”
Kodak officials throughout the fall had vowed that it was not planning to file bankruptcy, even after it made moves that signaled severe cash flow issues. Additionally, three Kodak directors resigned recently.
Perez said the board and the senior management team unanimously believe bankruptcy is a necessary step for Kodak’s future. Chapter 11 gives the company the best opportunities to maximize the value in its digital capture patents and its printing and deposition technologies, Perez said.
Dominic DiNapoli, vice chairman of FTI Consulting Inc., will serve as chief restructuring officer to support the management team as to restructuring matters.
Kodak reportedly listed $5.1 billion in assets and $6.75 billion in debts.
EKRA, an association of Kodak retirees, announced early Thursday it will take steps to protect the interests of Kodak retirees in bankruptcy proceedings.
“While we are saddened by the Kodak bankruptcy filing, we will now execute the plans that we have already prepared in anticipation of bankruptcy to fight for retirees' pensions and benefits,” said Bob Volpe, president of EKRA.
“EKRA will file notice with The Office of the U.S. Trustee to be appointed to the committee of unsecured creditors, representing the interests of retirees who have a claim,” Volpe said.
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