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NEW YORK, Aug 20 (Reuters) - Eastman Kodak Co,once a mighty photography pioneer, earned court approval onTuesday for a plan to exit bankruptcy as a much smallerdigital-imaging company.
The green light from U.S. Bankruptcy Judge Allan Gropper inNew York puts Kodak on track to exit bankruptcy in about twoweeks.
"It will be enormously valuable for the company to get outof Chapter 11 and hopefully begin to regain its position in thepantheon of American business," Gropper said.
Kodak, based in Rochester, New York, was for yearssynonymous with household cameras and family snapshots. It fileda $6.75 billion bankruptcy in January 2012, weighed down by highpension costs and a years-long delay in embracing digital cameratechnology.
It has sold off assets, including its consumer-focusedoperations, and will emerge from Chapter 11 to focus mainly oncommercial products such as high-speed digital printingtechnology and flexible packaging for consumer goods.
It will mean a lower public profile for Kodak's iconic nameand its expected revenues, about $2.5 billion, are roughly halfof what it had when it filed for Chapter 11.
In bankruptcy, Kodak failed to obtain significant value forits portfolio of patents, which experts said was a key reason ithad to sell core businesses and reinvent itself. But thebankruptcy resolved a major dispute with retirees over pensions,and it has forged a restructuring plan that, while wiping outshareholders, should pay secured creditors and second-liennoteholders in full.
General unsecured creditors are likely to receive a marginalpayout in the neighborhood of 4 cents to 5 cents on the dollar.
"This comes on a day when many are losing retirementbenefits, and many are finding that their recovery as a creditoris just a minute fraction of what their debt is," Gropper said."But I cannot decree a larger payment for creditors or anypayment for shareholders if the value is not there."
Kodak plans to emerge from bankruptcy as early as Sept. 3,its attorney, Andrew Dietderich, said at a hearing on Tuesday inU.S. Bankruptcy Court in New York.
THE FALL OF THE MIGHTY
Kodak's bankruptcy capped a protracted plunge for thecompany, which was founded in 1880 by George Eastman, theinventor of the hand-held camera and rolled photographic film.Kodak's market value topped $31 billion in the mid-1990s.
When it filed for bankruptcy, it hoped to fetch more than $2billion for about 1,100 patents related to digital imaging. Butdue in part to losses in high-profile patent litigation withApple Inc, the company was only able to sell theportfolio for about $525 million to a consortium led byIntellectual Ventures and RPX Corp.
The company sought other ways to save money. In April, itresolved a crucial dispute with its British pension, whichdropped a $2.8 billion claim against Kodak while buying thecompany's personalized imaging and document imaging businessesfor $650 million.
The company reached an $895 million financing deal in Junewith JPMorgan Chase & Co, Bank of AmericaCorp and Barclays Plc. It also plans a $406million rights offering, selling 34 million shares, or 85percent of the equity in the reorganized company, with proceedsgoing to creditors.
Shareholders fought to salvage some value from thebankruptcy, including at Tuesday's hearing, saying Kodak wasundervaluing its reorganized entity. But Gropper repeatedlydenied their efforts to form a committee to represent theirinterests, saying it was clear there would be no value for them.
Gropper's patience ran out on Tuesday, when he admonishedone shareholder for asking what he felt were overly broadquestions of Kodak executives about their methodology for thecompany's valuation. The Canadian shareholder spent close to anhour at the podium.
Cross-examination questions must be narrowly focused,Gropper said.
"It's like that in Canada too, yes?" said the judge, raisinghis voice.
Gropper later admitted he'd "been a bit impatient" with somestakeholders, calling Kodak's collapse a "tragedy of Americaneconomic life."
The case is In re: Eastman Kodak Co, U.S. Bankruptcy Court,Southern District of New York, No. 12-10202.
