| NEW YORK, June 25
NEW YORK, June 25 The framework of a plan by
Eastman Kodak Co to restructure as a commercial
imaging business was approved by a bankruptcy judge on Tuesday,
bringing the former photography company one step closer to
exiting from Chapter 11 protection.
Judge Allan Gropper in U.S. Bankruptcy Court in Manhattan
said he was "happy" to green-light the so-called disclosure
statement, which creditors will use as a reference when they
vote on the plan in the coming weeks.
Kodak declared bankruptcy in January of 2012 because of high
pension costs and after falling many years behind rivals in
embracing digital technology in its photography business.
It has since sold a variety of assets, and will emerge from
Chapter 11 as a mainly commercial imaging-focused enterprise.
Last week, the company announced it had reached an $895
million financing deal with JPMorgan Chase & Co, Bank of
America Corp and Barclays Plc. Kodak will use
the money to pay off loans that funded its bankruptcy, as well
as for working capital after its exit from Chapter 11, expected
later this year.
Kodak also plans to implement a $406 million rights
offering, selling 34 million shares, or 85 percent of the equity
in the reorganized company. Proceeds would go to repay various
creditors, including more junior second-lien creditors that
would no longer receive equity in the reorganized company.
Before Kodak can exit bankruptcy, its restructuring plan
must be supported by creditors, and the plan must go before
Gropper for a final sign-off. That hearing is expected to take
place on Aug. 20.
Gropper voiced some compassion for Kodak's smaller
creditors, many of whom have sent letters to the court
expressing concerns about their claims, which stand to see
little or no recovery.
One business owner in Colorado said in a letter to Gropper
that her company may go bankrupt because of a $148,000 claim
against Kodak, Gropper said.
Shareholders, whose stakes stand to be wiped out altogether,
have flooded the court with letters, and some have sought
representation of a committee to vouch for its interests. That
is a decidedly uphill battle, since Gropper has already once
refused to appoint a shareholder committee. But the judge said
at Tuesday's hearing that shareholders deserve some answers,
whether in the form of responses from Kodak or a hearing on the
"These letters are heartfelt," Gropper said.
The case is In re: Eastman Kodak Co, U.S. Bankruptcy Court,
Southern District of New York, No. 12-10202.