Josh OngKodak said in a press release (via All Things D) that it has submitted its petition with the U.S. Bankruptcy Court for the Southern District of New York. Citigroup has agreed to loan the ailing company $950 million to help it shore up capital ahead of the proceedings, though the debtor-in-possession credit facility is subject to court approval.
The 120-year-old photography company said that it "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." Employee wages and benefits will still be paid and "customer programs" will continue, according to the release.
Dominic DiNapooli, Vice Chairman of FTI Consulting, has been appointed Chief Restructuring Officer to see Kodak through the reorganization. The company expects to complete its U.S.-based restructuring during 2013. Subsidiaries outside of the U.S. are not subject to proceedings, the release revealed.
“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,†said CEO Antonio Perez. “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.â€
Perez added that the decision to pursue chapter 11 was a unanimous decision from the company's board of directors and senior management team. According to him, they believe it 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,†he continued.
As its bread-and-butter film business disintegrated in recent years, Kodak proved unable to successfully make the leap into the digital era. The company burned through a significant portion of its cash reserves in 2011. Early this month, reports suggested that Kodak was readying a bankruptcy filing after a last-ditch effort to sell off some of its patents fell through. Those patents are expected to now be sold off on auction while Kodak is under bankruptcy protection.
Perez, who headed up HP's printer group before switching to Kodak, had desperately tried to move Kodak into the printing business, but the company failed to gain much traction in the industry.
Kodak then turned to patent licensing to generate income. It succeeded in wringing close to $1 billion dollars from Samsung and LG over an image preview patent and then set its sights on Apple by filing a lawsuit against the iPhone maker with the International Trade Commission. Perez had said that "a lot of money, big money" was at stake in its case against Apple.
Apple, however, put up a fight, winning a preliminary victory early last year. Last December, the ITC announced that it had pushed back the date for a final decision on the case to September 2012. The delay came as a significant blow to Kodak, as some pundits predicted that it might not last until then.
Faced with the prospect of losing against Apple, Kodak then looked to sell off its collection of digital imaging patents in hopes of earning a lump sum of cash instead of royalty payments, but it was unable to close a deal.
Kodak did, however, get off a parting shot at Samsung on Wednesday when it sued the Korean electronics maker just hours before declaring bankruptcy.
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Charles Martin
Malcolm Owen
William Gallagher
Christine McKee
Wesley Hilliard
54 Comments
I recently had some photos printed at Pro Photo Supply in Portland, Or. They have a Kodak printer that uses a chemical process with the image generated by lasers. I have to say - thanks to the great efforts of the staff - I came out with absolutely stunning prints (11" x 17"), Particularly beautiful were the shots of black friends in Colombia. The dark skin tones are so subtly shaded and warm.
As a long time photographer I would be saddened if Kodak were to fail to reorganize itself. It would be a real tragedy.
For now: Thank you Kodak for this and many, many more tools for my art.
Hey, Kodak already got rid of one of their best products: Kodachrome. Now that was a spectacular product: Kodachrome 25.
Most of Kodak's current value is in the rapidly declining value of its digital photography portfolio. Kodak really hasn't innovated for years. Kodak is bringing ancient things to the table. Things like the Bayer array (now being actively replaced by newer designs) or the PhotoCD (haven't seen/heard of an operational Kodak PIW for years).
Hey, Kodak already got rid of one of their best products: Kodachrome.
Now that was a spectacular product: Kodachrome 25.
I never knew how to pronounce that. Koda-chrome, Kodac-HHA-rome
Remember this day, gentlemen: the beginning of the end of film.
Film may have been on the endangered species list a long time ago, but one of the big three manufacturers has failed to buoy analog with its digital ingenuity. Fuji and Agfa are somehow still alive, god knows why, but the biggest is about to be bought out by a Chinese firm and morphed into a shell of itself. Just watch. It's a sad, sad day.