January 19, 2012
After denying for four months that it would do so, Kodak has now officially applied for bankruptcy in the United States, citing an intention to “bolster liquidity” and “enable the company to focus on its most valuable business lines”.
In a press release, Kodak announced that it had secured $950 million (€737.8 million) in financing from financer Citigroup to reorganise its business, whilst noting that the “flow of goods and services” globally will continue “in ordinary course”, as well as stating that “non-US subsidiaries are not included” in the filing.
The filing was undertaken at the US Bankruptcy Court for the Southern District of New York, with Kodak adding it intends to “bolster liquidity”, “monetize non-strategic intellectual property”, “fairly resolve legacy liabilities” and “focus on its most valuable business lines” in the digital and printing subsidiaries it set up for itself.
Employee wages and benefits will be paid, and non-US subsidiaries will not be affected, with the restructuring intended to have taken place by the end of next year. A website has been set up to explain the situation to consumers and dealers, and can be found here.
Antonio M. Perez, Chairman and CEO of Kodak, stated in the press release: “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. 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.
“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.”
The BBC noted that “Kodak’s share of the market has been eroded by competitors” in photography down the years, with a “refocus on making printers” intended to “stem falling profits”.
In previous months The Recycler has regularly reported on Kodak’s financial situation, stemming from its poor Q3 results and an outright denial four months ago that it would file for bankruptcy. The Wall Street Journal predicted earlier this month that the company would file, and despite optimistic Q4 predictions in December and a reorganisation this week, the OEM has now begun the process of reorganisation.
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