Eastman Kodak and its US subsidiaries have filed for Chapter 11 bankruptcy protection after the digital imaging and pre-press giant ran out of money to finance its stuttering transformation.
The 131-year-old company, which is headquartered in Rochester, New York, filed voluntary petitions in the US Bankruptcy Court for the Southern District of New York on 19 January.
Kodak, which has secured a $950m debtor-in-possession finance facility from Citigroup for the next 18 months, said that its overseas subsidiaries were unaffected by the filing and would continue to meet their obligations to suppliers.
Kodak's attempts to raise funds through the sale of some of its non-core digital imaging patents since the middle of last year have been thwarted by ongoing rumours about the company's ability to continue to finance itself.
The Chapter 11 restructuring, which is expected to continue through 2012 and into 2013, is needed to "bolster liquidity in the US and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the company to focus on its most valuable business lines".
These business lines are centred around Kodak's Stream inkjet printheads and Prosper presses and imprinting systems, which are expected to replace Kodak's dwindling film sales with ink revenue.
Kodak chief executive Antonio Perez said: "Kodak is taking a significant step toward enabling our enterprise to complete its transformation. At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core IP assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company.
"After considering the advantages of Chapter 11 at this time, 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. Our goal is to maximize value for stakeholders, including our employees, retirees, creditors, and pension trustees. We are also committed to working with our valued customers.
"Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio: our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images and have generated over $3 billion of licensing revenues since 2003; and our breakthrough printing and deposition technologies, which give Kodak a competitive advantage in our growing digital businesses."
Kodak is currently suing Apple, HTC, Fujifilm and Samsung for patent infringement.
Kodak is being advised by Lazard, FTI Consulting and Sullivan & Cromwell. In addition, Dominic DiNapoli, vice chairman of FTI Consulting, will serve as chief restructuring officer to support the management team as to restructuring matters during the Chapter 11 case.
Kodak has set up a website (www.kodaktransforms.com) to keep suppliers and customers updated throughout the restructuring process.