Kodak Files for Bankruptcy Protection 1/18/2012

[Scott_Sheppard]

Kodak Files for Bankruptcy Protection

What will happen now !!

http://online.wsj.com/article/SB10001424052970204555904577169920031456052.html

 

[Poisson Du Jour]

"The 131-year-old company struggled for decades to cope with the emergence of competitors in its film business and the ..."

Sounds like the vultures are circling. I guess it could well be the end of the roll for the great icon of celluloid, but we'll see. It would be nice to hear of some good news for this once powerhouse of imaging, rather than the death rattles.

 

[EASmithV]

I dearly hope that if anything is saved, the film division should be on the top of the list.

 

[tomalophicon]

www.kodaktransforms.com

 

[Curt]

Fishhook!

 

[2F/2F]

Here's hoping they emerge a leaner and meaner company that still produces the best film in the world. Somehow I doubt it, though.

 

[Jeff Kubach]

Here's hoping they emerge a leaner and meaner company that still produces the best film in the world. Somehow I doubt it, though.

Me too!

Jeff

 

[dnjl]

Well, no surprise here. I hope they will somehow continue to produce film and chemistry.

 

[Grainy]

what will this say for Kodaks business the next few months? Will all productiin stop or will it be business as usual while the economy guys to their work? The question is stock up today or is it okay to wait.

 

[Steve Smith]

Will all productiin stop or will it be business as usual while the economy guys to their work?

They claim business as usual on their website. I suspect there is a lot of running around like headless chickens going on in the background though.


Steve.

 

[Thomas Bertilsson]

They need to restructure. Badly. This is the best way to do it.

 

[cluttered]

www.kodaktransforms.com

Interesting site, but doesn't mention film as far as I can tell. And if you use their search facility for 'film' the result doesn't fill me with confidence.

 

[railwayman3]

what will this say for Kodaks business the next few months? Will all productiin stop or will it be business as usual while the economy guys to their work? The question is stock up today or is it okay to wait.

The point of Bankruptcy protection is to prevent "the plug being pulled" on a company's activities while a plan is made to realise, in the best way, the remaining value of the company, for the eventual benefit (or minimised loss) to creditors, shareholders, employees and everyone financially involved.

This plan could include the sale of assets, the sale of all or part of the company's businesses, continuation of all or parts of the business on a different scale and numerousd other considerations which may only become apparent after many months.

My guess (from working on insolvency matters a long time ago!)
is that there will be no immediate cessation of film making (or any other activities) until plans have progessed. The financial managers or administrators would not be doing their duty if they slashed the film making plants before their future potential value (if any) had been properly evaluated.

 

[alanrockwood]

I assume they are filing chapter 11. If so then the company will continue to operate while it restructures its debt. This will basically amount to finding a deal among the creditors restructure the debt. The shares will continue to trade for a while, and then, when the bankruptcy process is over the old shares will be cancelled. At that point the shareholders will lose 100% of their investment. (That's 100%, as in they won't receive one red cent.)

If the company emerges from bankruptcy as an operating company then the current creditors will be the new shareholders. However, in doing this the creditors will agree to write down or completely cancel the debt owed to them by Kodak.

There is also the possibility that the company will be liquidated. Liquidation could occur if it becomes apparent that there are no viable business prospects for the company. I think this is somewhat unlikely in this case, but not impossible, given the sorry state of the market for Kodak's products.

If there are any of you who are thinking of buying Kodak shares hoping to make money when the shares go up after the company emerges from bankruptcy you need to hear the and remember the following. If you buy and hold Kodak shares you will lose every last penny of your investment. There is virtually no chance that the current shares will have any value at the end of the bankruptcy proceedings. I repeat, you will lose every last penny if you hold your shares. The only possible chance for a shareholder to make money is to use the shares as betting chips, hoping to make money by buying and selling on the fluctuations of the share price. However, even this is, in general, a losing strategy because this kind of betting game is less then a zero sum game.

 

[railwayman3]

They claim business as usual on their website. I suspect there is a lot of running around like headless chickens going on in the background though.


Steve.

I'd think that, for the reasons in my post above ^^^) that it will be business as usual for a while.

And I'm quite sure that running around like headless chickens will be the one thing which is not happening. Professional administration under Sect 11 is the one thing which could produce benefits, hopefully for we analog folk.

 

[alanrockwood]

A little more on bankruptcies. There is a kind of food chain at work in a bankruptcy. The government comes first, i.e. if the company owes any taxes then the government gets paid before anyone else. Next come any unpaid pay owed to employees. (This does not include pensions.) After that comes the secured debt. After that you have the unsecured debt. (Typical unsecured debt will be holders of unsecured bonds, and money owed to vendors.) Last in line you have the shareholders.

Each level in the food chain has to be made whole before the next level down can get anything. Thus, for example, the holders of secured debt must be made whole if there is any hope for the unsecured debt, and the unsecured debt must be made whole before there is any hope for the shareholders. This means it is hopeless for the shareholders. There is a simple reason for this, namely, the companies debts exceed the assets. This means there will be nothing left for the shareholders, and they will therefore lose every penny.

 

[Scott_Sheppard]

The really sad part of this deal is all the retired workers from Eastman Kodak that gave their working lives for the company are now left for DEAD without NOTHING - ZERO !! - I bet George Eastman rolled over in his grave tonight, and guess who they have to thank for all of this happiness ? The leader that ran Eastman Kodak into the ground - Antonio Perez !!

 

[Steve Smith]

They need to restructure. Badly.

No, they need to do it wel!!


Steve.

 

[Moopheus]

Interesting site, but doesn't mention film as far as I can tell. And if you use their search facility for 'film' the result doesn't fill me with confidence.

It does, but not as a consumer product. "Pro photo products" are under the commercial businesses tab. All the currently offered films are listed there. Portra gets the most prominent placement.

 

[Aristophanes]

The point of Bankruptcy protection is to prevent "the plug being pulled" on a company's activities while a plan is made to realise, in the best way, the remaining value of the company, for the eventual benefit (or minimised loss) to creditors, shareholders, employees and everyone financially involved.

Not quite.

The point of debtor-in- possession loans is to continue operations. The bankruptcy could, potentially, halt all operations without it. Most companies (suppliers, distributors, retailers) wold not enter into contract without the financing, which must be judicially approved as a priority loan of precedence above other creditor interests.

 

[Toffle]

Call me an ostrich, but I'm gonna do exactly the same thing I do anytime I read the doom and gloom about film photography. I'm gonna go blow my allowance on film and paper and chemicals and leave someone else to worry about the store.

I'm off on a four-day film bender. Starting right.....

 

[Aristophanes]

From Bloomberg:

http://www.bloomberg.com/news/2012-...oneer-files-for-bankruptcy-protection-1-.html

I'd note two interesting factoids relating to the film biz:

1) The note about selling assets. This is not just about Kodak restructuring and shedding bad debt, but about a partial liquidation and divestment. With the film demand curve still dropping, even accelerating, this unit is almost sure to go. The coating equipment gets less and less valuable every day. Creditors will not take shares in a restructured company with a depreciating asset like that.

2) Sony Studios and Warner Brothers are two of the largest unsecured creditors. They are also likely two of the largest consumers of Kodak film products and services through the motion picture side which drives the bulk of the demand. Kodak's film assets are most likely to be salvaged by the motion picture industry. This is where the money is. How these creditors are compensated will be an interesting side-story. I would not at all be surprised to see a consortium of motion picture people get together and bid on the coating and processing assets related to film.

 

[Moopheus]

From Bloomberg:

I would not at all be surprised to see a consortium of motion picture people get together and bid on the coating and processing assets related to film.

Of course, such a consortium would not be concerned with much beyond providing for their own needs. We would likely be left out in the cold.

 

[zsas]

I am struck how the press release makes no mention of film anywhere. Which supports my suspicion that Film will be divested. The PR says digital a million times...I think the writing is on the wall as their lack of commitment to this group in the near future

As far as who will buy it (Film assets) anyones guess. Aristo, interesting theory re a motion picture consortium.

 

[Thomas Bertilsson]

No, they need to do it wel!!


Steve.

Thanks for the humor amid the turmoil.