Following months of speculation and several futile attempts to raise capital, Eastman Kodak has given in to adverse (for it) market conditions and filed for Chapter 11 bankruptcy protection, apparently unable to adapt to a rapidly changing digital imaging environment.
Kodak’s stock plunged 35% at the start of trading on Thursday, when the news was announced. The New York Stock Exchange suspended trading within a few minutes after the opening bell.
Eastman Kodak will not go away and will continue to operate as it attempts to reorganize under Chapter 11 bankruptcy protection. As part of its filing, made in the federal bankruptcy court in the Southern District of New York, the company will seek to continue selling a portfolio of 1,100 digital imaging patents to raise cash to operate.
“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Antonio M. Perez, the company’s chief executive. “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 I.P. assets.”
Eastman Kodak will still service those in the motion picture and television industry that use film products, but its power as an advocate for film technology has taken a serious hit. For decades, its film technologies have fought against the inevitable emergence of digital high-definition production in the creation of television shows and feature films.
Today, many cinema and TV productions are still shot on Kodak film stocks. Purists still swear by the “look and feel” of film versus digital images. The company helped set the standard for 35mm film, and introduced the 16mm film format for home movie use and lower budget film and television productions. The company also developed and promoted the 8mm and Super 8 formats for the consumer market.
In its bankruptcy filing last Thursday, Kodak listed $5.1 billion in assets and $6.75 billion in liabilities as of Sept. 30. It obtained $950 million debtor-in-possession from Citigroup to provide it funds to operate during bankruptcy. Kodak said that its non-American subsidiaries are not part of the filing.
Founded in 1880 by George Eastman, Kodak became one of America’s most notable companies, helping establish the market for camera film and then dominating the field with a 90 percent share in 1976. Eastman treated his employees well and contributed to the growth of the town of Rochester, NY, its corporate headquarters. Now, its bankruptcy protection could also allow Kodak to shed hundreds of millions of dollars in pension obligations to those same workers.
Kodak has also filed new patent infringement suits against a number of competitors, including Fujifilm and Apple, an effort to shore up the value of the patents it hopes to sell.