Kodak Files for Reorganizational Bankruptcy
ROCHESTER, NY—Eastman Kodak and its U.S. subsidiaries filed voluntary petitions this week for Chapter 11 business reorganization in the U.S. Bankruptcy Court for the Southern District of New York.
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.
The business reorganization is intended to bolster the company’s liquidity in the United States 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 investments in digital and materials deposition technologies in recent years, generating approximately 75 percent of its revenue from digital businesses in 2011.
Kodak expects to pay employee wages and benefits and continue customer programs. Subsidiaries outside of the United States 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 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 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,” 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.