Can Kodak find a new moment after bankruptcy?

A much smaller and commercially focused company will exit Chapter 11 next month. Losers include retirees, shareholders and creditors.

By Aimee Picchi Aug 21, 2013 10:14AM
Kodak signs at trade show (© Daniel Acker/Bloomberg via Getty Images)Eastman Kodak (EKDKQ) has won court approval to exit bankruptcy, but the company to emerge will cease selling to consumers. 


The one-time photography giant, which stumbled and failed to adapt to the advent of digital cameras, entered court protection with about 17,000 employees, but it will exit with only 8,500 workers, Bloomberg notes. 


Started by George Eastman in 1888, the company boomed over the next century, inventing the Brownie camera and creating the idea of snapshot photography with the slogan, "You press the button -- we do the rest."


But Kodak sold the consumer print and photographic products during the bankruptcy, severing ties to the businesses it was best known for. Today, Kodak is only slightly larger than it was over a century ago, when it employed 5,000 people in the early 1900s. 


Kodak hopes to exit bankruptcy on Sept. 3, although an attorney for the company warned that "closing is complicated," USA Today notes.


But the exit approval was far from a Kodak moment, given the overall suffering it means for retirees, shareholders and Kodak creditors. 


"Many are losing their retirement benefits," U.S. Bankruptcy Court Judge Allan Gropper said during approval of the plan, USA Today notes. "Many are finding their recovery as a creditor is just a minute fraction of what their debt is from Kodak. (Kodak's) decline and bankruptcy is a tragedy of American economic life."


Kodak filed for bankruptcy in 2012, after cutting 47,000 employees since 2003 and closing 13 factories and 130 photo laboratories, Bloomberg notes. 


The company stumbled as digital photography gained in popularity, despite the fact that one of its own invented the first digital camera. When engineer Steven Sasson demonstrated his prototype to Kodak's management in the 1970s, he recalled to The New York Times that their reaction was, "That's cute -- but don't tell anyone about it."


The new Kodak will need to spread its message far and wide, given the company's desire to dominate the commercial printing industry. Its plan also depends on selling $406 million of new stock. 


"Next, we move on to emergence as a technology leader serving large and growing commercial imaging markets -- such  as commercial printing, packaging, functional printing and professional services -- with  a leaner structure and a stronger balance sheet," chief executive Antonio Perez said in a statement.


Whether Kodak can recapture some of its lost magic remains to be seen.


Follow Aimee Picchi on Twitter at @aimeepicchi.


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24Comments
Aug 21, 2013 11:05AM
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Yep! Retirees, shareholders and creditors take it up the ying yang while CEO Perez and his cronies walk away with millions of dollars in bonuses. Ain't life grand?
Aug 21, 2013 11:17AM
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Don't worry the lawyers and the executives (the ones that put the company in the position of having to file bankruptcy due to their incompetence, indifference, and not wanting to keep up with the times) will be just fine. They won't see any financial harm from this. Just everyone else who helped build the company into what it is.

Any deal should include executives paying back past bonuses and maybe even some salary, as well as full loss of benefits and pensions and making them start over as well with a least some of them being out right fired on top of this. Some might not like that but I think its fair and no reason they should get by unscathed while everyone else takes a beating.

 

I think its time

Aug 21, 2013 11:38AM
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Our country's laws need to be changed to protect the retirees of failed/failing corps. Pensions and health care benefits for those who worked to build a company should be the first to be protected when poor and greedy management decisions kill a once vibrant organization.
Aug 21, 2013 11:31AM
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I dont know who would be crazy enough to purchase stocks from this new company when the previous stockholders got shafted. 
Aug 21, 2013 11:42AM
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I never have understood why a company should be allowed to stay in business once it files bankruptcy, I could understand it if it were allowed to restructure and pay off all it's debt. But after screwing, employees, suppliers, contractors and investors, what is the justification in allowing them to stay in business. I don't believe it is up to government to regulate what CEOs make, but I also don't believe companies should just be forgiven of their debt.
Aug 21, 2013 11:34AM
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Kodak is(was) in a dying industry because of technological improvement out of film to digital.  I don't think they will make it with the new business model.  Kodak got in enough trouble over the years with pricing schemes that gave them their profit years ago.  That stuff  just can't be pulled with digital world with the structure of patents in the market they are jumping into. Their profits were tied to market power, something I just don't see them recapturing, no pun intended.
Aug 21, 2013 12:29PM
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Typical US company response:  "that's cute, don't tell anyone about it".  That action sealed their fate, when they could have led the digital revolution, gotten most of the patents and transformed the company, they put their heads in the sand and held on to what they had... and got crushed by the inevitable. 
Aug 21, 2013 11:44AM
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Investing is a gamble. Shareholders should understand the risk they are buying into and should watch what is happening at the board level. Kick out the greedy bastards who only care about lining their own pockets and put working people on the board to run the company. How bad can an uneducated person be if the CEO's and  the like can really screw things up.
Aug 21, 2013 12:42PM
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A commerical printing and imaging company? Must be huge market out there for 12-story tall "Big Brother Hates Your Guts" or "Scr*w You" or "Go F*ck Yourself" posters.

 

Has anybody,  especially the ones that should be feeling the least bit responsible, do any of these people have any idea of what will happen to all these tens of thousands of former retired Kodak employees when this company, like so many others, gets to walk away from its pension and health care promises and obligations? 

Aug 21, 2013 2:18PM
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How is it Fuji can still profit from film but Kodak can't? Kodak is Film!
Aug 21, 2013 12:38PM
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Digital technology has all but ended the use of film in all aspects of the printing industry. There are now digital "presses" (very high end color copiers) that can produce outstanding color reproduction that rivals all but the finest offsets and gravure presses... and at huge savings in production costs because of lower equipment and supply costs. There are even digital printing units capable of working on-line with high speed web presses.
Aug 21, 2013 7:04PM
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I am VERY grateful to Anthony Perez for doing everything he could to save Kodak.  Under his guidance

he and his team has put Kodak back together.  Many, many, many thanks for his efforts.  It is unfortunate so many had to suffer but GUESS WHAT????  Kodak doesn't sell film anymore so therefore Kodak doesn't have any money. 

Do you know anyone that wants a buggy whip?

Aug 21, 2013 9:42PM
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Film is not Dead.

 

Unless you buy a 60K large format digital camera, you cannot come close to the quality of an 8x10 or 4x5 negative.

 

Film will still be made under the Kodak name, but not by the actual Kodak company discussed in this article.

 

I believe the UK Pension group purchased or recieved the rights to manufacture the film... too bad the US pensioners are getting screwed yet again. This is why Labor Laws are important.

Aug 21, 2013 2:59PM
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some posters are saying the retirees are taking the brunt wrongly.

 

I argue they are taking exactly what they bargained for.  They decided to hitch their retirement wagon as a Pension Plan INSTEAD of a Defined Contribution plan.  This is an INVESTMENT strategy....

 

For these pensioners, they thought the payout would be higher not having to deal with the process of dealing with their own savings/IRA/401k etc AND they believed Kodak would take care of them... SO, the pensioners were really INVESTORS looking for a future payout - IT DIDN'T COME TO THEM..

 

Moral of the story: (listen up all you people who want govt to get involved or to punish Kodak) -- IF YOU WANT SOMETHING DONE RIGHT, DO IT YOURSELF (manage your own retirement)

*OR*

DEFINED BENEFIT = MORAL HAZARD! (any exec can promise you a dollar tomorrow for work done today)

 

SO start looking around at the PUBLIC sector and START TELLING your Representative the public employees should be on DEFINED CONTRIBUTION not DEFINED BENEFIT....

 

Aug 21, 2013 10:29PM
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I see nobody could tell I was being sarcastic about my first post

 

Aug 21, 2013 12:10PM
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hey----the people who took the hit are the ones this illustrious country always target to take the hit---

 

 

ain't America wonderful----sure make us proud to be here doesn't it------as ole George dubya would say---------

 

 

-"only in America"

 

 

hey---I got an idea !! ! ! !   lets pay bomi and all is cronies in Kodak stock

Aug 21, 2013 11:07AM
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But at least are economy is getting stronger

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