Brandon, FL (Law Firm Newswire) August 15, 2013 - A judge's approval of Kodak's plan to repay its creditors has put the company one step closer to emerging from Chapter 11 bankruptcy.
Eastman Kodak Co. filed for bankruptcy protection in 2012 after getting left behind by the digital photography revolution. In addition to the repayment plan, Judge Allen Gropper also approved documents that Kodak will send to its many unsecured shareholders to persuade them to sign onto the company's plan to continue as a much smaller, but profitable, enterprise.
“Chapter 11 bankruptcy is a crucial tool for struggling individuals and businesses,” said Brandon bankruptcy lawyer O. Reginald Osenton. “It affords protection from legal judgments on behalf of creditors while the person or business creates and implements a repayment plan. It also, as in this case, allows a company to radically reorganize its business plan to re-focus on its profitable operations.”
The lengthy disclosure statement lays out Kodak's new business plan. The plan gives up Kodak's legacy photographic business that created billions in profit and made the brand a household name. The company will now focus on commercial printing services and equipment.
The Manhattan bankruptcy courtroom was filled to capacity during the hearing on a recent Tuesday, with attorneys for numerous creditors present.
Kodak's reorganization plan would wipe out the company's current stock and replace it with new stock issued to its creditors. Some shareholders claim the company is worth more than it has stated, and therefore creditors should be fully repaid and current stockholders should not be wiped out. Gropper said a hearing scheduled for August 20 would address those claims when the court rules on Kodak's plan to emerge from bankruptcy. At that hearing, the court will listen to testimony on the company's value as well as how a liquidation would affect various stakeholders versus the company's current reorganization plan.
An attorney for the firm representing Kodak refuted the idea that there is hidden value in the company.
Kodak's plan to emerge from bankruptcy will allow unsecured creditors a chance to buy stock in the new company at a set share price of $11.94. If the company turns out to be successful, the creditors could thereby recoup some of their losses.
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