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Kodak to terminate part of retiree benefits

October 12, 2012

OEM reaches settlement with retiree committee that will save in costs and enhance liquidity.

What They Think reports that Kodak has resolved its $1.2 billion (€925,000) retiree benefits liability, with the company claiming that the proposed settlement will not impact retiree pension benefits.

The settlement with the Official Committee of Retirees will see Kodak’s Other Post-Employment Benefits (OPEB), which consist of medical, dental, life insurance and survivor income benefits, being terminated as of 31 December 2012.

As part of the settlement, Kodak will provide the 1114 Committee with a $7.5 million (€5.8 million) cash payment to support administration and benefit obligations, as well as a $635 million unsecured claim and a $15 million (€11.5 million) allowed administrative claim that would have priority status in the OEM’s reorganisation proceedings. The Committee will be able to use these funds to make payments to retirees to subsidise a portion of future benefit costs.

With the OPEB currently costing the company around $10 million (€7.7 million) per month, the agreement is expected to be a significant step in Kodak’s move towards emerging from Chapter 11 bankruptcy and has the support of the Official Committee of Unsecured Creditors.

While Kodak noted that it is aware the action will “pose challenges for retirees”, it asserts that it is “one of many necessary steps to put the company on a path to emerge as a profitable, sustainable company”.

The agreement is subject to approval and is scheduled to be heard at a hearing at the Bankruptcy Court on 29 October.

The Recycler reported earlier this week of Kodak CEO Antonio Perez’s discussion regarding the reasons behind the company filing for Chapter 11 bankruptcy in January of this year, with Perez stating that it did not signal Kodak’s imminent demise.

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