Kodak files for bankruptcy, secures $950 million lifeline
Baku, January 19 (AZERTAC). Eastman Kodak Co, which invented the hand-held camera and helped bring the world the first pictures from the moon, has filed for bankruptcy protection, capping a prolonged plunge for one of America’s best-known companies.
The more than 130-year-old photographic film pioneer, which had tried to restructure to become a seller of consumer products like cameras, said it had also obtained a $950 million, 18-month credit facility from Citigroup to keep it going.
The loan and bankruptcy protection from U.S. trade creditors may give Kodak the time it needs to find buyers for some of its 1,100 digital patents, the key to its remaining value, and to reshape its business while continuing to pay its 17,000 workers.
"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," Chairman and Chief Executive Antonio Perez said in a statement.
At end September, the group had total assets of $5.1 billion and liabilities of $6.75 billion.
Kodak said it and its U.S. subsidiaries had filed for Chapter 11 business reorganization in the U.S. Bankruptcy Court for the Southern District of New York. Non-U.S. subsidiaries were not covered by the filing and would continue to honor all obligations to their suppliers, it added.
Kodak once dominated its industry and its film was the subject of a popular Paul Simon song, but it failed to embrace more modern technologies quickly enough, such as the digital camera -- ironically, a product it even invented.
In the last few years, Kodak has used extensive litigation with rivals such as Apple Inc, BlackBerry maker Research in Motion Ltd and Taiwan’s HTC Corp over those patents as a means to try to generate revenue. Those patents may now be sold through the bankruptcy process.
George Eastman, a high school dropout from upstate New York, founded Kodak in 1880, and began to make photographic plates.
Within eight years, the Kodak name had been trademarked, and the company had introduced the hand-held camera as well as roll-up film, where it became the dominant producer.
Eastman also introduced the "Wage Dividend" in which the company would pay bonuses to employees based on results.
Kodak’s final downfall in the eyes of investors began in September when it unexpectedly withdrew $160 million from a credit line, raising worries of a cash shortage. It ended September with $862 million of cash.
In its bankruptcy, Kodak could try to restructure its debts, or perhaps sell all or some of its assets, including the patent portfolio and various businesses.
The company had promised to inject $800 million over the next decade into its UK pension fund. It now remains unclear how that country’s pension regulator might seek to preserve some or all of the company’s obligations to British pensioners.