Eastman Kodak (NYSE:EK) succumbed to bankruptcy on Thursday, marking a dramatic downfall for an American icon once synonymous with the imaging business.
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The move had been well telegraphed in recent months and comes as the Rochester, NY-based Kodak faced a liquidity crisis.
Kodak, which is more than 130 years old, filed for Chapter 11 in U.S. Bankruptcy Court for the Southern District of New York in the early hours of Thursday morning.
The imaging company is expected to continue to try to auction off a lucrative portfolio of 1,100 patents that could be worth around $3 billion while in bankruptcy. Interested parties, which reportedly include Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL), seemed to realize they would have greater leverage if they waited for Kodak to file for bankruptcy.
“Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio,” CEO Antonio Perez said in a statement, pointing to “our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images…and our breakthrough printing and deposition technologies.”
Kodak said it anticipates completing its U.S.-based restructuring during 2013. In the meantime, it expects to pay employee wages and benefits and continue customer programs.
To keep the company operating while in reorganization, Kodak said it has secured a $950 million debtor-in-possession, or DIP, financing with an 18-month maturity from Citigroup (NYSE:C).
Kodak, which listed $862 million of cash and equivalents on its balance sheet at the end of September, said it believes it has sufficient liquidity to operate its business during the Chapter 11 process.
Kodak has already been involved in a dramatic overhaul in recent years, shuttering 13 manufacturing plants, 130 processing labs and slashing its workforce by 47,000 since 2003.
“Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core IP assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company,” Perez said.
While it was at one time synonymous with the imaging industry, Kodak had fallen on hard times as it fell behind the curve in digital imaging. The company was ultimately unable to stay afloat in a sea of red ink, posting four-straight quarterly losses.
As of Wednesday’s close, Kodak’s market cap stood at just $150 million, a small fraction of its all-time high of $30 billion hit in 1997. Due to signs it would soon file for bankruptcy, Kodak’s shares plummeted below $1 in recent weeks.
Kodak said its non-U.S. subsidiaries are not included in the U.S. filing and are not subject to court supervision.
Lazard (NYSE:LAZ) and FTI Consulting are advising Kodak and its board on the bankruptcy.
Kodak’s stock was inactive Thursday morning as the New York Stock Exchange suspended trading before the open of trading.