Eastman Kodak announced this morning that it and its U.S. subsidiaries have filed voluntary petitions for Chapter 11 business reorganization in the U.S. Bankruptcy Court for the Southern District of New York.
Antonio M. Perez, chairman and chief executive officer of Kodak tried to reassure suppliers, vendors, employees and retirees that they should expect “business as usual,” during the reorganization process and announced that Kodak has obtained a fully-committed, $950 million debtor-in-possession credit facility with an 18-month maturity from Citigroup to enhance liquidity and working capital, (subject to court approval).
The company expects to pay employee wages and benefits and continue customer programs throughout its reorganization, and promises to “honor all post-petition obligations to suppliers in the ordinary course. Subsidiaries outside of the U.S. are not subject to proceedings and will honor all obligations to suppliers, whenever incurred.”
One key goal in the Chapter 11 process, outlined by Perez was to “fully enforce Kodak’s intellectual property rights against industry players that have infringed on our proven and valuable patents in the area of digital imaging.”
In recent years, the 131-year-old company has amassed an enormous library of patents for a variety of technologies, and has built a reputation for litigious enforcement. The patent licensing part of the business has generated approximately $3 billion over the last nine years, and recently, the company has launched lawsuits against Samsung, Fujifilm, Apple, HTC and Research In Motion.
Perez explained that “Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio: our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images and have generated over $3 billion of licensing revenues since 2003; and our breakthrough printing and deposition technologies, which give Kodak a competitive advantage in our growing digital businesses.”
“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Perez. “At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core IP assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company.”
“After considering the advantages of chapter 11 at this time, 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,” Perez continued. “Our goal is to maximize value for stakeholders, including our employees, retirees, creditors, and pension trustees. We are also committed to working with our valued customers.”
