Judge approves Kodak plan to exit bankruptcy

NEW YORK: A federal judge has approved Kodak’s plan to emerge from bankruptcy protection.
Judge Allan Gropper’s ruling paves the way for the photography pioneer to emerge from court oversight as a new company focused on commercial and packaging printing.
The company has said it hopes to emerge from bankruptcy protection on Sept. 3.
In making his ruling, Gropper noted that his approval of the plan will result in the loss of retirement and health care benefits for many former workers, while many of the company’s investors will recoup just pennies on the dollar.
“So at a time of admitted tragedy, let us take a moment to dwell on the future and hope that Kodak will be successful,” Gropper said.
Founded by George Eastman in 1880, Eastman Kodak Co. is credited with popularizing photography at the start of the 20th century and was known all over the world for its Brownie and Instamatic cameras and its yellow-and-red film boxes. It was first brought down by Japanese competition and then an inability to keep pace with the shift from film to digital technology.
The company filed for bankruptcy reorganization last year after struggling with increasing competition, continuing growth in digital photography and growing debt.
Since its filing, Kodak has sold off many of its businesses and patents, while shutting down the camera manufacturing unit that first made it famous.
“Kodak is a different company than the one in the popular imagination and very different from the one that filed for bankruptcy,” Kodak attorney Andrew Dietderich told the court at the start of Tuesday’s hearing.
Earlier this year, the company said it would sell its personalized and document-imaging businesses to its UK pension plan for $650 million as part of a deal that settles $2.8 billion in claims that the retirement fund had sought from the photography pioneer.
It also sold its document imaging assets, digital imaging patents and online photo service, while shutting down other divisions.
Last week, a majority of the company’s creditors voted to approve its plan to emerge.
But some retirees, shareholders and other parties objected to it.
Although some shareholders argued that they should be entitled for something in exchange for their stock, Gropper said he ruled at a previous hearing that they weren’t.
He said the company’s creditors will only receive 4 cents or 5 cents on the dollar for their investments and that they’re entitled to be paid before shareholders are.
Generally, holders of common stock do not receive anything for their shares when a company emerges from bankruptcy.
The US Trustee also filed an objection challenging the legality of hefty cash and stock bonuses that Kodak executives are expected to receive when the Rochester, New York, company exits from bankruptcy protection.