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RIT Experts Discuss Kodak’s Bankruptcy Filing

January 19, 2012
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ROCHESTER, NY—Jan. 19, 2012—The vibrancy of the bright yellow box of film has faded. The iconic Eastman Kodak, once a giant in the film industry, has filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. Founded in 1881 under the helm of inventor George Eastman, the company was a trailblazer in photographic equipment and cameras until the shift to digital technology.

It’s no longer a “Kodak moment,” say experts from Rochester Institute of Technology (RIT)—who discuss the decline, struggles and opportunities for the global industrial and commercial technology giant.

The following are insights from experts at RIT’s E. Philip Saunders College of Business and RIT’s College of Imaging Arts and Sciences:

The business perspective

Daniel Tessoni, assistant professor of accounting in RIT’s E. Philip Saunders College of Business:

• The Eastman Kodak Chapter 11 filing was not unexpected. The filing indicates that the company’s ability to generate cash from its continuing operations is simply not sufficient to meet its creditors’ obligations.

• The good news is that this will buy time for management to deliver on a business plan that, if successfully executed, would allow it to emerge from Chapter 11 a more financially sound organization. The fact that the company has secured a $950 million line of credit and is seeking a stalking horse bidder for the patent portfolio that it is attempting to monetize can provide time for the company to deliver on a more sustainable business model.

• Ultimately that remains the big question. Is there a viable business model underlying Eastman Kodak’s financial troubles? Companies have emerged successfully from Chapter 11 filings because they have been able to deliver on a financially viable business plan.

• While Eastman Kodak’s management continues to express confidence in its ability to be a successful company, it has not provided any observable or tangible evidence to support that position. Until Kodak’s financial performance improves, its employees, retirees, creditors and other stakeholders remain at high risk.

John Ward, former Kodak employee and lecturer in RIT’s E. Philip Saunders College of Business:

• Kodak has many strong assets to carry forward post bankruptcy. While the brand value has dropped over the years, it is still very strong on a global basis. They have an excellent portfolio of intellectual property in the imaging space that can be the core of new solutions. They have excellent employees around the world. They have strong product lines in the commercial printing areas. These assets are significant and will likely provide the basis for successful go-forward model post bankruptcy.
 

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