Rochester, N.Y. - ( 13WHAM.com ) Just nine days after restructuring the company into two divisions, Eastman Kodak announced early Thursday morning that the company has filed for Chapter 11 bankruptcy.
The announcement was posted on the company's website at midnight.
Kodak has secured $950 million in debtor-in-possession financing from Citigroup to sustain itself with the goal of emerging from bankruptcy in 2013.
Kodak says the move was "intended to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the company to focus on its most valuable business lines."
"We are taking this step at this point in our transformation in order to build the strongest possible foundation for the Kodak of the future," said Kodak CEO and Chairman Antonio Perez in a videotaped message on Kodak's website.
The company expects to pay employee wages and benefits. They will also continue customer programs.
"We have four objectives: to provide our customers, vendors, suppliers and employees a greater measure of confidence in our position," Perez said.
Chapter 11 bankruptcy allows Kodak to restructure its debt, continue to operate, and work to emerge from bankruptcy.
Compare that to Chapter 7 bankruptcy, which forces a company to liquidate its assets and go out of business.
Kodak has also launched a new website with information on their reorganization plans. Click here to be directed to the site.
Regarding how the move will affect the Rochester, the company says on the website:
"Kodak will still be headquartered in Rochester. This is our hometown and our largest cornerstone in the U.S. and worldwide. We are proud of our long-standing history in Rochester, and our objective is to emerge as an ongoing business enterprise that is assured of long-term viability and so better able to be a vibrant member of this community and all communities of which we are a part."
On January 10, Kodak restructured into two divisions, consumer and commercial.
This month, the company has filed several lawsuits against phone companies Apple, HTC, and Samsung.
Kodak accuses the competitors of infringing on its digital patents.
What Does Bankruptcy Filing Mean to Stockholders?
Kodak stock, which closed at $0.55 on Wednesday, will be delisted from the New York Stock Exchange.
Kodak says its annual meeting for investors in February is cancelled.
It will continue to file quarterly and annual reports with the Securities and Exchange Commission.
What Does Bankruptcy Filing Mean to Employees and Retirees?
Kodak says normal business operations will continue, which includes paying salaries and benefits to employees.
Employees and retirees based in the United States can contact a hotline at (888) 249-2721 to address specific benefits and payroll questions not addressed on the website.
Kodak will evaluate its facilities and determine if any will have to close.
There are thousands of Kodak retirees who live in the Rochester area and around the country.
Eastman Kodak Retiree Association said it will take steps to protect the interests of Kodak retirees in bankruptcy proceedings.
"EKRA will file notice with The Office of the U.S. Trustee to be appointed to the committee of unsecured creditors, representing the interests of retirees who have a claim," said EKRA President Bob Volpe. "It is our intention, and our members expect us, to lead and to be their advocates in any way that will protect their pension and benefits. I want to assure retirees and their families that EKRA will work diligently with its own attorneys as well as advisors from the National Retiree’s Legislative Network (NRLN) to stand up for the interests of retirees in bankruptcy proceedings."
What Does Bankruptcy Filing Mean to Customers?
Kodak says it will continue to honor pending orders, warranties, and refunds and exchanges on Kodak products.
Deliveries will be shipped to retailers.
What Does Bankruptcy Filing Mean to Suppliers?
Under bankruptcy law, Kodak says it will be prohibited from making payments to suppliers for services or goods received prior to the filing.
Unpaid bills that preceded the Chapter 11 filing will be frozen and will be considered unsecured claims in the reorganization process.
You can call the Kodak Supplier Call Center at (800) 544-7009 or (585) 724-6100 if you have questions.
New York Governor Andrew Cuomo issued a statement on the bankruptcy filing, saying:
"The announcement that Kodak is filing for bankruptcy is difficult and disappointing news for the City and people of Rochester. Although Kodak will continue to operate during the bankruptcy process, the State has been in touch with the company and local officials and New York State stands ready to support the Rochester community. This is a time for all of us at all levels of government to come together and work with the private sector to support Rochester's growth. Rochester is known the world over as a place where businesses can come to thrive and grow and the State will continue to empower the Rochester community in order to build on that remarkable strength."
New York Congresswoman Kathy Hochul also issued a statement. it reads:
“My top priority has always been to help our local businesses thrive and to make sure Western New Yorkers have jobs to go to every day. In the weeks and months ahead, I will stand with Kodak Eastman’s current and past employees as they work through this difficult process. We must ensure that the employees and retirees’ voices are heard and that every effort is made to ensure they are treated fairly.
Today, I sent a letter to Kodak Chairman and CEO Antonio Perez urging him to keep the promises made to his approximately 7,100 employees currently working at Kodak and the nearly 25,000 retirees in the Rochester region. These employees planned their futures around the understanding that if they worked hard and kept their commitments to Kodak, Kodak would keep its commitments to them.”