Late Tuesday, Kodak announced it has
filed its Plan of Reorganization with the U.S. Bankruptcy Court,
initiating the process to emerge from Chapter 11 bankruptcy.
Kodak believes the submitted plan will enable to the company to emerge from bankruptcy as soon as July. It will be a company focused on commercial imaging and printing going forward.
According to court documents, Kodak plans to cancel its current stock and re-issue new stock.
The current stock will lose all value once Kodak emerges from bankruptcy.
"The stockholders of Eastman Kodak are a little bit like that homeowner that gets foreclosed. There won't be any value, you lose everything," said George Conboy, President of Brighton Securities.
A majority of those shares will go to the company's second lien holders. Kodak did not identify how much would go to unsecured creditors, which are owed as much as $2.2 billion. However it's expected, they will lose a lot in the transaction.
"What we are expecting at this point is that the unsecured creditors should get about 20 cents on the dollar," said Conboy.
Rochester-area company Optimation is one of the major unsecured creditors that is owed about $1.7 million dollars from Kodak.
Optimation President Bill Pollock released this statement today:
"Optimation has a long and valued relationship with Kodak. We are happy that the emergence plan has been developed. We anticipate that our relationship with Kodak will continue to be strong as they emerge. We are certain that both Optimation and Kingsbury will find new expanded ways to partner with Kodak in the future."
Optimation has already signed a new three-year manufacturing contract with Kodak.
Another group that could be affected are 1,100 retirees who have unfunded pensions.
The Eastman Kodak Retiree Association said it appears under the proposed plan those pensions would be paid with stock, not cash.
"I know the initial emotional reaction is what is the value of the stock going to be, is it going to be worth anything, that is to be determined," said Art Roberts, EKRA President.
EKRA has filed a court motion to get a retiree committee established for this group to determine if they will be paid fairly. That goes before the court on May 29.
In a statement, Kodak CEO Antonio Perez said, "The filing of the Plan of Reorganization and Disclosure Statement represents a major milestone in our reorganization: this initiates our emergence process. We now have a clear path forward for Kodak, and we are positioning the company for a profitable and sustainable future."
Former Kodak employee and now RIT lecturer, John Ward, says the new commercially focused Kodak will have to work in a new marketplace in the commercial printing and graphics business.
"They should be competitive in those technologies but they certainly won't have the dominant role like they had in the consumer photo businesses," said John Ward, RIT Business Lecturer.
The plan needs to be voted on by creditors and also needs U.S.
Bankruptcy Court approval before it can move forward.
The first hearing is expected in June.