KODAK Files Chapter 11

January 26, 2012 Betsy Lynch 2 Comments

KODAK filed for bankruptcy relief last week under Chapter 11.  With $6.75 billion of debt, the biggest creditor is Bank of New York Melon, which the company owes in excess of $650 million.  The digital age of photography has caused the company to struggle financially and hasn’t turned a real profit since 2004. 

In a video statement posted on KODAK’s website, CEO Antonio M. Perez said that the company has four objectives — obtaining the financing to reassure its employees, customers and other stakeholders that the company will stay in business; enabling it to pursue patent infringement claims against major companies including Apple Inc.; adjusting its “legacy costs” to a fairer level; and driving growth in the printing businesses Perez has declared are its future.
Citigroup Inc., one of the largest banks in the U.S., has offered to provide a $950 million credit line to help sustain the company’s operations while it reorganizes its finances. Kodak expects to continue operations while in Chapter 11. 
Under a typical Chapter 11, a company continues to operate while seeking to reorganize its finances. Many companies emerge successfully from Chapter 11.  However, some creditors may not be paid through the bankruptcy.  Top concerns would be retirees whose health benefits could be reduced, although such a step can only be done under the supervision of a bankruptcy court judge. 

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    January 26, 2012 REPLY

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