I see no documentation that film is profitable for Kodak, nor has been for the last 5 years. Their financials statements all say otherwise, as does the demolition of the facilities as they race to downsize. I see no signs of stabilization, just decline.
PE has commented extensively on the profitability, and he suggests money was shifted from the film division to the money losing digital branch to lower the overall tax burden. Tearing down excess facilities only means the market has declined, not that the remaining part loses money. And I have to remind you again: the current decline in film sales at Kodak comes from movie film, not photographic still film. Movie film, especially print film might well go away in the next few years, I don't know. The question is, whether one can make only color photographic film at the current volumes profitably. But still: Ilford, Foma, Adox and Efke couldn't care less about movie print film sales.
Real asset destruction is a loss of money and capital. Always. the decline of film sales is what killed Kodak on the balance sheet. There was no way management could have stopped that trend. What they did botch was management of their original digital lead.
Well, technically they could have used the excess money from their film branch to fund a proper downscale of their operations. As people here have already said, stock holders would have revolted against this because it would have devalued their stock. Well, look where this got them ....
Investors and creditors of emulsion production will be afraid to our good money after bad, especially where there is consumer market uncertainty.
And photographic film is the only uncertain market right now ....
Others have mentioned that Kodaks film business was mostly profitable even in the last 10 years. Kodak with its long time monopoly status used to be very generous when it came to worker compensation and retirement benefits, and they are paying dearly for this now. A chapter 11 might well release them from this burden and turn them into a quite profitable film business at 1/10 of their current size (or at their current size if the movie industry wants).
There will be investors who will invest in a profitable business and others who won't touch anything film related and rather invest in the next AAA rated pile of fertilizer (lots of growth potential here! ).
If colour film goes away, a lot of analog shooters will too. That will impact B&W sales from any source. A smaller aggregate market will increase prices substantially. This bodes poorly for a very small player like Ilford.
If the APUG forum is any indication, I'd say the vast majority of current analog shooters use mostly B&W. Ilford won't be harmed but rather see a boost if former users of Kodak's color offerings pour into the B&W market. If Kodak completely stops making B&W film, Ilford makes a close enough match for every Kodak B&W film (PlusX/FP4, TriX/HP5, TMax/Delta).
You don't have to buy a new digital camera either. That's your version of doom and gloom. There are certain economic advantages to digital in that every shot after original purchase gets less expensive and with analog it gets more expensive. And the dominant history of film cameras is of near-throwaway models. Refinancing Kodak's emulsion facilities for a market using 20 year-old cameras bought and sold off auction sites is going to raise question marks by anyone financing the Kodak leftovers. The credit will be short term, very expensive, and collateralized. That's a tough sell.
The near throwaway models have been thrown away by now or are (not) sold to collectors for 1$ a piece. Even photographic doofuses like me own high end professional cameras which would have been completely out of reach pipe dreams just 10 years ago, and these cameras will most likely be serviceable for decades to come.
There are a much more pressing dangers to Kodak's credit options: a huge unprofitable digital branch which can't even sell their patent portfolio for a reasonable price and the aforementioned burden from previous golden decades in the form of huge pension and health benefit liabilities.
*You* may go through a lot of film, but the market may require more proof that if you get hit by a bus there's someone to fill your shoes. Investors need to see the customer not yet on the horizon. A declining overall demand and no means to stabilize demand with new products (Lomo gets it correct) is the problem, both for analog film and MP film.
That bus hitting me might put a small dent in the film/chem/paper sales in my town but it's not going to put anyone out of business. Investors do see customers for Fuji, Ilford, Foma, Efke, Adox and others. If Kodak really goes away and if its product line gets chucked, I'd be somewhat afraid for color film, but B&W would rather thrive than wither.