By Nick Brown
NEW YORK Aug 20 Eastman Kodak Co,
once a mighty photography pioneer, earned court approval on
Tuesday for a plan to emerge from bankruptcy as a much smaller
The green light from U.S. Bankruptcy Judge Allan Gropper in
New York puts Kodak on track to exit bankruptcy in about two
"It will be enormously valuable for the company to get out
of Chapter 11 and hopefully begin to regain its position in the
pantheon of American business," Gropper said.
Kodak, based in Rochester, New York, was for years
synonymous with household cameras and family snapshots. It filed
a $6.75 billion bankruptcy in January 2012, weighed down by high
pension costs and a years-long delay in embracing digital camera
With the court approval, the company's exit from bankruptcy
is now imminent, Chief Executive Antonio Perez said in a
"Next, we move on to emergence as a technology leader
serving large and growing commercial imaging markets," he said,
adding the company will have a leaner structure and a stronger
It has sold off assets, including its consumer-focused
operations, and will emerge from Chapter 11 to focus mainly on
commercial products such as high-speed digital printing
technology and flexible packaging for consumer goods.
Its new structure will mean a lower public profile for
Kodak's iconic name and its expected revenues, about $2.5
billion, are roughly half of what it had when it filed for
In bankruptcy, Kodak failed to obtain significant value for
its portfolio of patents, which experts said was a crucial
reason it had to sell core businesses and reinvent itself. But
the bankruptcy resolved a major dispute with retirees over
pensions, and it has forged a restructuring plan that, while
wiping out shareholders, should pay secured creditors and
second-lien noteholders in full.
General unsecured creditors are likely to receive a marginal
payout in the neighborhood of 4 cents to 5 cents on the dollar.
"This comes on a day when many are losing retirement
benefits, and many are finding that their recovery as a creditor
is just a minute fraction of what their debt is," Gropper said.
"But I cannot decree a larger payment for creditors or any
payment for shareholders if the value is not there."
Kodak plans to emerge from bankruptcy as early as Sept. 3,
its attorney, Andrew Dietderich, said at a hearing in U.S.
Bankruptcy Court in New York.
THE FALL OF THE MIGHTY
Kodak's bankruptcy capped a protracted plunge for the
company, which was founded in 1880 by George Eastman, the
inventor of the hand-held camera and rolled photographic film.
Kodak's market value topped $31 billion in the mid-1990s.
When it filed for bankruptcy, it hoped to fetch more than $2
billion for about 1,100 patents related to digital imaging. But
due in part to losses in high-profile patent litigation with
Apple Inc, the company was only able to sell the
portfolio for about $525 million to a consortium led by
Intellectual Ventures and RPX Corp.
The company sought other ways to save money. In April, it
resolved a crucial dispute with its British pension, which
dropped a $2.8 billion claim against Kodak while buying the
company's personalized imaging and document imaging businesses
for $650 million.
The company reached an $895 million financing deal in June
with JPMorgan Chase & Co, Bank of America
Corp and Barclays Plc. It also plans a $406
million rights offering, selling 34 million shares, or 85
percent of the equity in the reorganized company, with proceeds
going to creditors.
Shareholders fought to salvage some value from the
bankruptcy, including at Tuesday's hearing, saying Kodak was
undervaluing its reorganized entity. But Gropper repeatedly
denied their efforts to form a committee to represent their
interests, saying it was clear there would be no value for them.
Gropper's patience ran out however when he admonished one
shareholder for asking what he felt were overly broad questions
of Kodak executives about their methodology for the company's
valuation. The Canadian shareholder spent close to an hour at
Cross-examination questions must be narrowly focused,
"It's like that in Canada too, yes?" said the judge, raising
Gropper later admitted he'd "been a bit impatient" with some
stakeholders, calling Kodak's collapse a "tragedy of American
The case is In re: Eastman Kodak Co, U.S. Bankruptcy Court,
Southern District of New York, No. 12-10202.