Eastman Kodak Plan of Reorganization Solicitation of Votes Commences | June 27, 2013
Bankruptcy Court Approval of Disclosure Statement June 25, 2013
Kodak will commence solicitation of votes for its Chapter 11 Plan of Reorganization following the Bankruptcy Court’s approval of Kodak’s Disclosure Statement on Tuesday, June 25, 2013. The Kodak Bankruptcy case is pending under Case No. 12-10202 in the United States Bankruptcy Court for the Southern District of New York.
EKDKQ closed Tuesday’s regular trading session at $0.12, down $0.01 or 4.17% on a volume of 3.86 million shares.
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Chapter 11 Plan of Reorganization filed on April 30
On April 30, 2013, Eastman Kodak Co., the 132 year old company, filed its Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York. The Bankruptcy Court (The Honorable Allan Gropper) approved the Disclosure Statement on June 25. Pursuant to Bankruptcy Code Section 1125, the U.S. Bankruptcy Court for the Southern District of New York today determined that the Company’s Disclosure Statement contains the information necessary to enable creditors to vote on the Plan of Reorganization.
The Bankruptcy Court also approved a backstop commitment agreement and rights offering, as well as an agreement with J.P. Morgan Chase, Barclays Bank and Bank of America Merrill Lynch to arrange new exit financing and post-emergence facilities of up to $895 million. According to Kodak, the Rights Offering, combined with the comprehensive financing package, will enable Kodak, at emergence, to repay its secured creditors under the current senior and junior Debtor-in-Possession loan facilities in full, finance its exit from Chapter 11, and strengthen its capital structure for the future.
Kodak plans to implement a $406 million rights offering, selling 34 million shares, or 85 percent of the equity in the reorganized company. Proceeds would go to repay various creditors, including more junior second-lien creditors that would no longer receive equity in the reorganized company.
Kodak expects to emerge from Chapter 11 protection in 3Q2013.
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Kodak Bankruptcy Impact
Shareholders, whose stakes stand to be wiped out altogether, have flooded the court with letters, and some have sought representation of a committee to vouch for its interests. That is a decidedly uphill battle, since Gropper has already once refused to appoint a shareholder committee. But the judge said at Tuesday’s hearing that shareholders deserve some answers, whether in the form of responses from Kodak or a hearing on the shareholders’ concerns.
“These letters are heartfelt,” Gropper said.
Other Bankruptcy Filings of Iconic Companies
Kodak declared bankruptcy in January of 2012 because of high pension costs and after falling many years behind rivals in embracing digital technology in its photography business.
A number of iconic companies have recently entered bankruptcy protection, including Readers’ Digest, Hostess Brands Inc., maker of Twinkies and Wonder Bread, and Eastman Kodak Co., inventor of Kodachrome and the Instamatic camera.
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