Eastman Kodak said early Thursday that it filed for bankruptcy protection, as the 131-year-old film pioneer struggled to adapt to an increasingly digital world, reports The New York Times.
“The board of directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak,” Chairman and Chief Executive Antonio Perez said in a statement.
He added: “Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core intellectual-property assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company.”
The company said it obtained $950 million debtor-in-possession from Citigroup to provide it liquidity to operate during bankruptcy. Kodak also noted that its non-American subsidiaries are not part of the filing.
According to CBS News, the move comes as the ailing company has failed to find a buyer for its trove of 1,100 digital imaging patents. Kodak said in November that it could run out of cash in a year if it didn’t sell the patents, for which it hoped to fetch billions.
Kodak once dominated its industry, but it failed to embrace more modern technologies quickly enough, such as the digital camera — ironically, a product it invented.
Founded in 1880 by George Eastman, Kodak became one of America’s most notable companies, helping establish the market for camera film.
Nearly a century after Kodak’s founding, the astronaut Neil Armstrong used a Kodak camera the size of a shoebox to take pictures as he became in 1969 the first man to walk on the moon, Reuters reports.
Six years after Armstrong’s walk Kodak invented the digital camera. The size of a toaster, it was too big for the pockets of amateur photographers, whose pockets now are stuffed with digital offerings from the likes of Canon, Casio and Nikon.
Then came foreign competitors, notably Fujifilm of Japan, which undercut Kodak’s prices.
Then the onset of digital photography eroded demand for traditional film, squeezing Kodak’s business so much that in 2003 the company said that it would halt investing in its longtime product.
Kodak’s market value has sunk to below $150 million from $31 billion 15 years ago.
In recent years, Chief Executive Perez has steered Kodak’s focus more toward consumer and commercial printers.
But the move didn’t help to restore company’s annual profitability.
The company and its board are being advised by Lazard, FTI Consulting Inc. and Sullivan & Cromwell LLP. Dominic DiNapoli, vice chairman of FTI Consulting, will serve as chief restructuring officer. Kodak expects to complete its U.S.-based restructuring during 2013.
It is unclear how Kodak will address its pension obligations, many of which were built up decades ago when U.S. manufacturers offered more generous retirement and medical benefits than they do now. Many retirees hail from Britain where Kodak has been manufacturing since 1891.
The Chapter 11 filing had been rumored for weeks.
Multiple directors have resigned from Kodak’s board and the company last week announced that it realigned and simplified its business structure in an effort to cut costs, create shareholder value and accelerate its long-drawn-out digital transformation.
Since the start of the year, Kodak said it now has two business units — commercial and consumer — instead of three.
At the same time, Kodak did not announce job cuts as part of the bankruptcy protection filing.