Eastman Kodak files for Chapter 11 bankruptcy protection

Eastman Kodak Company and its US subsidiaries have filed voluntary petitions for Chapter 11 business reorganization in the US Bankruptcy Court for the Southern District of New York, as speculated earlier this month.
 
Kodak said the business reorganization is intended to bolster liquidity in the US and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities and enable the company to focus on its most valuable business lines. Kodak has made investment in digital and materials deposition technologies in recent years, generating approximately 75 percent of its revenue from digital businesses in 2011.
 
In addition, Kodak has obtained a fully-committed US$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.
 
Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under US bankruptcy laws. In Chapter 11, in most instances the debtor remains in control of its business operations as a debtor-in-possession, and is subject to the oversight and jurisdiction of the court.

Kodak expects to pay employee wages and benefits and continue customer programs. Subsidiaries outside of the US are not subject to proceedings and will honor all obligations to suppliers, whenever incurred. Kodak and its US subsidiaries will honor all post-petition obligations to suppliers in the ordinary course.
 
Antonio Perez, chairman and chief executive officer, said: ‘Kodak is taking a significant step toward enabling our enterprise to complete its transformation. 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.’
 
As well as consumer products, photographic and document imaging divisions, Kodak has wide interests in the package printing market. Its Graphic Communications business covers: web-fed and sheet-fed presses; flexographic printing solutions, such as the Flexcel NX range, CTP and other flexo printing consumables; proofing; workflow management; and security and brand protection solutions, such as Traceless AD.
 
Xeikon recently announced it had acquired the rights to the Thermoflex trademark from Kodak.
 
‘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,’ 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 US$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.’
 
‘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.’

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