Eastman Kodak Files for Chapter 11

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After a series of mishaps that included running low on money, rumors of bankruptcy, the resignation of three board members, an inability to sell its patents, and the start of several lawsuits based on its patent claims, Eastman Kodak (NYSE: EK) filed for Chapter 11. Management had insisted it had no such plans, just as it had said earlier in the year that it had the money to make it until its patents were sold or licensed.

Kodak has desperately begun several patent suits, the most recent of which was against Samsung. The firm announced that:

[I]t and its U.S. subsidiaries filed voluntary petitions for chapter 11 business reorganization in the U.S. Bankruptcy Court for the Southern District of New York.

The business reorganization is intended to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the Company to focus on its most valuable business lines. The Company has made pioneering investments in digital and materials deposition technologies in recent years, generating approximately 75% of its revenue from digital businesses in 2011.

Kodak has obtained a fully-committed, $950 million debtor-in-possession credit facility with an 18-month maturity from Citigroup to enhance liquidity and working capital. The credit facility is subject to Court approval and other conditions precedent. The Company 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.

Kodak expects to pay employee wages and benefits and continue customer programs. Subsidiaries outside of the U.S. are not subject to proceedings and will honor all obligations to suppliers, whenever incurred. Kodak and its U.S. subsidiaries will honor all post-petition obligations to suppliers in the ordinary course.

Kodak has traded below $1 for some time, with occasional runs up as investors believed it had made decisions that would allow the company to continue as a going concern. Those equity investors have now been wiped out.

Douglas A. McIntyre