Bankrupt Eastman Kodak Co EKDKQ.PK said on Wednesday it was ending retiree healthcare and survivor benefits at the end of the year, allowing it to resolve a $1.2 billion liability, one of its biggest obligations.
The benefits, which include medical, dental, life insurance and survivor income benefits, will end December 31.
Kodak will give retirees a $635 million unsecured claim, a $7.5 million cash payment to support initial administration and benefit obligations, and a $15 million allowed administrative claim that would have priority in reorganization proceedings.
The deal with the official committee representing retirees in Kodak's bankruptcy proceedings does not affect pension benefits.
In a statement, Kodak said the move will improve its liquidity even as it acknowledged "this action will pose challenges for retirees." But the company said the step was necessary to allow Kodak to emerge from bankruptcy protections "as a profitable, sustainable company."
Kodak has been paying about $10 million per month to provide those benefits.
Kodak filed for Chapter 11 bankruptcy in January. The Rochester, New York, company is a pioneer of photography but struggled to adapt to the digital age, and is shifting its focus toward its commercial packaging and printing business.
The bankruptcy is in Re: Eastman Kodak Co. et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.
(Reporting by Phil Wahba in New York; Editing by Richard Chang)