updated 04:55 am EST, Thu January 19, 2012
Kodak seeks Chapter 11 protection
A recent prediction that Kodak was on the verge of bankruptcy has proven true with the iconic American company officially filing for bankruptcy protection. Despite a number of restructuring attempts as well as the sale of patents and a string of patent suits seeking damages, the 130-year old pioneering photographic company was forced to seek protection from creditors. It has also secured $950 million in credit from Citibank while its buys time to sell some of its 1,100 patents, and reposition itself while also maintaining the salaries of its 17,000 employees, reports Reuters.
"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," said Chairman and CEO Antonio Perez in a statement.
"Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core intellectual-property assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company,” he
Although Kodak had invented digital photography, it still somehow managed to become sidelined in an industry that it had once dominated to the point of near monopoly. However, as it sought to pursue and attempt to preserve its core businesses including print photography and traditional camera products, it failed to take the lead in the new age of digital photography and editing.
At the end of September last year, the company had assets totaling $5.1 billion, including $82 million in cash. However it had obligations totaling $6.75 billion. Unable to turn its position around, Kodak and its US subsidiaries filed for Chapter 11 protection in the Southern District of New York. Once holding a market cap of $31 billion as recently as 15 years ago, it is now trading at a market value of a paltry $150 million.
Its recent decline began in 2007 at which point it has remained unable to turn a profit and has had to watch as its accounts drained and became increasingly reliant on borrowing while it desperately tried to turn its fortunes around.
While under Chapter 11, Kodak may seek to sell all of its remaining patents, and some or all of its other assets. Recent attempts at lawsuits against Samsung, RIM, Apple and HTC have met with mixed results and not yielded the returns the company has so far hoped for. However, it has found success in licensing its patents as well as in patent sales raking in $2 billion, including striking a deal recently with IMAX. Its remaining patents could fetch up to $1 billion.