Kodak creditors attempt to mitigate damage

A number of Kodak's creditors are attempting to reduce their exposure to the imaging giant by issuing "reclamation claims" for recently-shipped goods.

Kodak filed for Chapter 11 bankruptcy protection on 19 January. Under the US Bankruptcy Code creditors can make written claims for the goods, or the value of the goods, delivered in the 45 days that immediately preceded the filing.

Industry creditors asserting this right include Day International, which is claiming for $508,268 (£321,000) worth of NexPress sleeves and blanket cylinders.

In the pre-bankruptcy period Sun Chemical said it supplied Kodak with at least $149,000 worth of dry powder pigments used in inkjet inks, as well as pigments in polyester resin used for electrophotographic toners.

Printer manufacturer Oki Data has submitted a claim for goods totalling $499,475. The precise nature of the items purchased by Kodak is not disclosed due to a confidentiality agreement between Oki and Kodak.

Ilford Imaging Switzerland has put in a demand for $270,581.

Court filings related to the bankruptcy also reveal the identity of Kodak's top 50 unsecured creditors, including: German speciality photographic and inkjet paper manufacturer Felix Schoeller, which is owed $4.1m; aluminium manufacturer Alcoa $2.8m; US dealer GE Richards Graphic Supplies $2.3m; Toray Industries and Collins Ink are both owed $1.9m; and Champion Photochemistry is listed at $1.7m.

Collins Ink, which makes 90% of the inks used in Kodak's Versamark presses, is particularly unfortunate in that it tried to break ties with Kodak last October citing fears over Kodak's shaky finances.

It was subsequently forced by court order to continue supplying Kodak for the duration of the 180-day notice period in its contract, effectively forcing it to risk carrying the bag for millions of dollars of Kodak debt.

At the time of the legal dispute, it was stated that Kodak owed Collins $2.5m in outstanding orders under the standard 60-day payment terms it had adhered to over the 10 years of the contract.

If these were terms were applied across all Kodak suppliers then even those who are successful in pursuit of their reclamation orders will be left carrying the can for 15 days of unpaid orders, equivalent to $600,000 in Collins' case.

Kodak's single-biggest trade creditor is digital camera manufacturer AOF Imaging Technology, which is owed $31.2m.

The Kodak Pension Plan of the United Kingdom appears at the very top of the creditors' list, showing an unliquidated pension guarantee amount described as "undetermined". The pre-Chapter 11 figure attached to this liability was some $800m.

Kodak has also filed documents proposing to make special arrangements to pay certain 'critical vendors' some or all of the money they were owed prior to Kodak's bankruptcy filing. This would result in a two-tier system for creditors.

Justifying the request, Kodak said that if critical vendors refused to supply the company, the resulting disruption would "ripple through the business, idling production of certain product lines and the ability to service existing products … Further, given that many product lines are managed globally with common vendors serving multiple regions, a disruption to the Debtors' [Kodak's] operation could have a ripple effect on foreign affiliates."

A hearing was due to be heard on 3 February but Kodak decided to postpone it to an as-yet undefined date.

Kodak began restructuring its consumer offering this week, and has decided to exit the markets for digital cameras, pocket video cameras and digital picture frames. Some 400 jobs will go as a result.

A round of 160 jobs cuts is also underway in the US at other operations. This includes around 80 employees, or 16% of the workforce, at its Dayton high-speed inkjet facility where the Prosper range is manufactured.

 


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Collins Ink, which makes 90% of the inks used in Kodak's Versamark presses, is particularly unfortunate in that it tried to break ties with Kodak last October citing fears over Kodak's shaky finances.

It was subsequently forced by court order to continue supplying Kodak for the duration of the 180-day notice period in its contract, effectively forcing it to risk carrying the bag for millions of dollars of Kodak debt.

At the time of the legal dispute, it was stated that Kodak owed Collins $2.5m in outstanding orders under the standard 60-day payment terms it had adhered to over the 10 years of the contract.

If these were terms were applied across all Kodak suppliers then even those who are successful in pursuit of their reclamation orders will be left carrying the can for 15 days of unpaid orders, equivalent to $600,000 in Collins' case.