Kodak Announces Reorganization Plan, Expects to Exit Bankruptcy by September
The Eastman Kodak Company this week revealed its plans to emerge from bankruptcy and refocus its business operations. The company, made famous by its film business, expects to emerge from bankruptcy protection by September 2013 and will readjust its business model to concentrate on the commercial print industry.
Kodak, which filed for chapter 11 bankruptcy protection in January 2012, issued a statement outlining its reorganization strategy late Tuesday. As part of the proceedings, Kodak will sell its personalized and document-imaging business to the U.K. Kodak Pension plan for $650 million, settling the company's $2.8 billion retirement obligation.
According to the statement, the pension plan will sell those companies off to fund retirement payments, and the settled debt would allow Kodak to emerge from bankruptcy some time between July and September. The pension plan would be allowed to continue to use the Kodak name while operating the consumer film business.
The core Kodak business will turn to focus almost exclusively on the commercial print industry. The company believes it can become profitable by selling commercial printing and imaging machinery, chemicals and printing surfaces. The company also expects to provide professional printing services to other business.
"The filing of the Plan of Reorganization and Disclosure Statement represents a major milestone in our reorganization: this initiates our emergence process," said Antonio M. Perez, Kodak's Chairman and Chief Executive Officer. "We now have a clear path forward for Kodak, and we are positioning the company for a profitable and sustainable future."
The reorganization plan is not finalized, as U.S. bankruptcy court must review the documents and approve the plan. Once that occurs, the company will schedule a vote with its creditors on whether to proceed with the reorganization. If that plan is approved, the company will issue new shares of stocks to its creditors. Old shares of Eastman Kodak Co. stock will be canceled, a common occurrence in bankruptcy proceedings.
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