Kodak files for Chapter 11 bankruptcy
ROCHESTER, N.Y. -- Eastman Kodak Co., running short of cash and unable to sell 1,100 digital imaging parents that could have rescued it, filed Thursday for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.
The iconic Rochester company, whose history dates to the late 19th century and the technical and marketing genius of founder George Eastman, has been besieged for the past three months by rumors that it would make a bankruptcy filing. Those rumors had intensified in the past two weeks.
"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," CEO Antonio M. Perez said in announcing the decision.
The filing listed assets of $5.1 billion and debts of $6.75 billion.
Perez assured employees that it will be business as usual under Chapter 11. "Kodak expects to pay employee wages and benefits," the company said.
As of a year ago, Kodak had 7,100 employees in the Rochester area and 18,800 companywide. The worldwide figure is now 17,000, the company said in its bankruptcy papers, about 8,000 of them in the U.S. It did not give a new Rochester-area figure.
At its peak in the early 1980s, the company employed 62,000 people in Rochester and 130,000 worldwide.
Kodak has about 25,000 retirees in the region, so the company's legacy is a powerful one in Rochester.
The filing was made in the Southern District of New York, a common location for major bankruptcy cases because the New York City metropolitan area has the infrastructure of banks, law firms and other institutions needed to handle complex legal matters.
Citigroup Inc.. one of the largest banks in the U.S., has committed to providing Kodak with a $950 million credit line to help sustain the company's operations while it reorganizes its finances.
Kodak said it expects to continue operating its businesses while in Chapter 11, "and to continue the flow of goods and services to its customers."
Perez said in a video statement on Kodak's website that the company has four objectives while in Chapter 11 -- obtaining the financing to reassure its employees, customers and other stakeholders that the company will stay in business; enabling it to pursue patent infringement claims against major companies including Apple Inc.; adjusting its "legacy costs" to a fairer level; and driving growth in the printing businesses Perez has declared are its future.
The filing wasn't a surprise, though no one outside the company knew precisely when it would come. Kodak was scheduled to report its 2011 fourth-quarter and full-year financial results on Jan. 26, and it may have become apparent to company officials that the news would be bad, leading to a pre-emptive move into Chapter 11.
Kodak had said in November that it was in danger of being unable to pay its bills at some point in 2012 unless it received a substantial infusion of cash. What seemed like the best potential source of cash was the sale of its digital patent portfolio, which analysts said could fetch up to $3 billion.
Kodak had said in November that it was in danger of being unable to pay its bills at some point in 2012 unless it received a substantial infusion of cash. What seemed like the best potential source of cash was the sale of its digital patent portfolio, which analysts said could fetch up to $3 billion.
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