* Liabilities exceed assets by about $1.65 billion
* Kodak holds 1,100 digital patents
* Obtains $950 mln credit line from Citigroup
* Chairman/CEO says bankruptcy filing a "necessary step"
* Non U.S. subsidiaries not part of filing
Jan 19 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
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.
"Now we must complete the transformation by further
addressing our cost structure and effectively monetizing
non-core intellectual-property assets. We look forward to
working with our stakeholders to emerge a lean, world-class,
digital imaging and materials science company," he added.
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 honour all
obligations to their suppliers, it added.
A FALLEN ICON
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.
Its downfall hit its Rust Belt hometown of Rochester, New
York, with employment there falling to about 7,000 from more
than 60,000 in Kodak's heyday.
Its market value has sunk to below $150 million from $31
billion 15 years ago.
In recent years, Chief Executive Perez has steered Kodak's
focus more toward consumer and commercial printers.
But that failed to restore annual profitability, something
Kodak has not seen since 2007, or arrest a cash drain that has
made it difficult for Kodak to meet its substantial pension and
other benefits obligations to its workers and retirees.
Perez said bankruptcy protection would enable Kodak to
continue to work to maximize the value of its technology assets,
such as digital-imaging patents it says are used in virtually
every modern digital camera, smartphone and tablet. The company
has also built up patented printing technology.
Kodak said it was being advised by investment bank Lazard
Ltd, which has been helping Kodak look for a buyer for
its digital patents.
Other advisers included business-turnaround specialist FTI
Consulting Inc, whose vice chairman, Dominic DiNapoli,
would serve as chief restructuring officer for Kodak, supporting
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.
WALKING ON THE MOON
George Eastman, a high school dropout from upstate New York,
founded Kodak in 1880, and began to make photographic plates. To
get his business going, he splurged on a second-hand engine for
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.
Nearly a century after Kodak's founding, the astronaut Neil
Armstrong used a Kodak camera the size of a shoebox to take
pictures as he became in 1969 the first man to walk on the moon.
Those pictures arguably had more viewers than the 80 films
that have won Best Picture Oscars and were shot on Kodak film.
Six years after Armstrong's walk, and not long after Simon
told his mama not to take his Kodachrome away, Kodak invented
the digital camera.
The size of a toaster, it was too big for the pockets of
amateur photographers, whose pockets now are stuffed with
digital offerings from the likes of Canon, Casio and Nikon.
But rather than develop the digital camera, Kodak put it on
the back-burner and spent years watching rivals take market
share that it would never reclaim.
In 1994, Kodak spun off a chemicals business, Eastman
Chemical Co, which proved to be more successful.
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.
PENSIONS IN FOCUS
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.
It is unclear how Kodak will address its pension
obligations, many of which were built up decades ago when U.S.
manufacturers offered more generous retirement and medical
benefits than they do now. Many retirees hail from Britain where
Kodak has been manufacturing since 1891.
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.