Econintersect: In a move that had been expected for months, the venerable U.S. corporation Eastman Kodak (NYSE:EK) has revealed it has filed for Chapter 11 bankruptcy protection. In a case analogous to a 2oth century buggy whip manufacturer who stayed too long out of the automobile business, Kodak found itself left behind by the digital revolution for photography which rendered its best of class film technology products unwanted in the new age. Kodak stock, which closed at $0.55 on January 18 traded in the afterhours market up to $0.59. At the time this is written there are no reports of trades following the announcement. The stock had traded above $5 at the beginning of 2011 and obove $3 as recently as early September. In 2007 the stock traded as high as $29.
According to an article by Richard Waters in the Financial Times, the decision to declare bankruptcy was a unanimous decision of the Kodak board. Waters says it came in the midst of Kodak’s attempts to raise money by selling its portfolio of digital imaging patents. It seems that the “door handles and steering wheels” invented by the modern day buggy whip company were not enough to effect a financial rescue.
The bankruptcy affects the U.S. company and its domestic subsidiaries. Units in other parts of the world are not impacted.
Chapter 11 bankruptcy code is a reorganization protection aspect of the law that gives protection against creditors until a restructuring is completed, by 2013 according to a statement from Kodak. Kodak has some ongoing business prospects that do not involve “buggy whips.” In a statement in the early hours of Thursday morning (January 19) Kodak chairman and CEO Anthony Perez said that digital imaging now constitutes 75% of the company’s revenue. The company also said that it would be able to continue to meet its obligations to suppliers.