Kodak files for Chapter 11 bankruptcy protection
As film giant Kodak files for bankruptcy protection, everyone from photographers to economists is looking back at the company that was, for so long, synonymous with American photography. The company has entered the US 'Chapter 11' process by which a court oversees its restructuring and protects it from its creditors as it attempts to reorganize into a profitable business. However it emerges from the process, Kodak will never again be the photographic titan it was during the film era. This has prompted many retrospective articles, including a heartfelt and personal piece by New York Times writer and photography blogger David Gonzalez.
Meanwhile, The Economist has also published two interesting pieces on the company: the first comparing its fortunes with those of its Japanese peer Fujifilm, and a blog post looking at how large companies struggle with technology changes. The irony of Kodak's dedication to research and development helping give birth to the technologies that saw its downfall is widely remarked upon.
|Kodak's film business (consumer, professional and movie) is still profitable, the company stresses.|
Kodak has recently whipped-up a flurry of litigation against large electronics companies using the basic digital imaging processes it created. As well as creating the first commercial DSLR (the Kodak DCS), the company invented many of the technologies on which modern cameras are based (and its patents have raised over $3bn in revenue since 2003). No matter what happens to the company, it should be remembered that Kodak wasn't just the company to create the 20th Century icon 'Kodachrome,' it's also the company that created the Bayer color filter array that underpins the overwhelming majority of digital cameras used across the world.
Eastman Kodak Company and Its U.S. Subsidiaries Commence Voluntary Chapter 11 Business Reorganization
Flow of Goods and Services to Customers to Continue Globally in Ordinary Course; Non-U.S. Subsidiaries Are Not Included in U.S. Filing and Are Not Subject to Court Supervision; Company Secures $950 million in Debtor-in-Possession Financing in U.S.; Kodak’s Reorganization to Facilitate Emergence as Profitable and Sustainable Enterprise
ROCHESTER, N.Y., January 19 -- Eastman Kodak Company (“Kodak” or the “Company”) announced today that it 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.
The business reorganization is intended to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the Company to focus on its most valuable business lines. The Company has made pioneering investments in digital and materials deposition technologies in recent years, generating approximately 75% of its revenue from digital businesses in 2011.
Kodak has obtained a fully-committed, $950 million debtor-in-possession credit facility with an 18-month maturity from Citigroup to enhance liquidity and working capital. The credit facility is subject to Court approval and other conditions precedent. The Company believes that it has sufficient liquidity to operate its business during chapter 11, and to continue the flow of goods and services to its customers in the ordinary course.
Kodak expects to pay employee wages and benefits and continue customer programs. Subsidiaries outside of the U.S. are not subject to proceedings and will honor all obligations to suppliers, whenever incurred. Kodak and its U.S. subsidiaries will honor all post-petition obligations to suppliers in the ordinary course.
“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Antonio M. Perez, Chairman and Chief Executive Officer. “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 workforce 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.”
“After considering the advantages of chapter 11 at this time, the Board of Directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak,” Mr. Perez continued. “Our goal is to maximize value for stakeholders, including our employees, retirees, creditors, and pension trustees. We are also committed to working with our valued customers.
“Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio: our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images and have generated over $3 billion of licensing revenues since 2003; and our breakthrough printing and deposition technologies, which give Kodak a competitive advantage in our growing digital businesses.”
Mr. Perez concluded, “The Board of Directors, the senior management team and I would like to underscore our appreciation for the hard work and loyalty of our employees. Kodak exemplifies a culture of collaboration and innovation. Our employees embody that culture and are essential to our future success.”
Kodak has taken this step after preliminary discussions with key constituencies and intends to work toward a consensual reorganization in the best interests of its stakeholders. Kodak expects to complete its U.S.-based restructuring during 2013.
The Company and its Board of Directors are being advised by Lazard, FTI Consulting Inc. and Sullivan & Cromwell LLP. In addition, Dominic DiNapoli, Vice Chairman of FTI Consulting, will serve as Chief Restructuring Officer to support the management team as to restructuring matters during the chapter 11 case.
More information about Kodak’s Chapter 11 filing is available on the Internet at www.kodaktransforms.com. Information for suppliers and vendors is available at (800) 544-7009 or (585) 724-6100.
Kodak will be filing monthly operating reports with the Bankruptcy Court and also plans to post these monthly operating reports on the Investor Relations section of Kodak.com. The Company will continue to file quarterly and annual reports with the Securities and Exchange Commission, which will also be available in the Investor Relations section of Kodak.com.
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