Eastman Kodak Co., headquartered in New Hampshire's neighboring state of New York, filed Chapter 11 bankruptcy in January of 2012. It has taken almost 19 months to get an approval from the bankruptcy judge.
Chapter 11 bankruptcy is an option that businesses often choose because it allows them to restructure their debts and still remain in business. If a business is owned and operated under a partnership, limited liability or corporation, it is sometimes the only option available if the company wants to restructure their debts but they owe too much money to file a Chapter 13 bankruptcy. A Chapter 7 bankruptcy might allow the company to sell its assets and pay its liabilities, but the business would not be able to restructure their debts and continue in business.
Now that the judge has approved the Chapter 11 bankruptcy for Kodak, they are free to end their bankruptcy and get back to growing the business again, which the company fully intends to do. That is tentatively scheduled for Sept. 3. The chief executive officer of the company stated that this was a critically important step in the process and will allow the company to come back as a technology leader in the market.
The judge didn't seem especially thrilled with the debt restructuring plan, but he approved it. He claimed that creditors are only getting a minute fraction of the debt owed to them, and that many who had investments in Kodak were losing retirement benefits.
With the reorganization, Kodak will be issuing all new stock and cancelling existing stock. Stock has dropped a hefty 28 percent. Some investors and shareholders voiced their objections to the bankruptcy terms at the hearing. In fact, at least 200 objections were filed by shareholders.
Many of the creditors have already signed off on the restructured debts. When the bankruptcy exit takes place, Kodak will be out from under the scrutiny of the U.S. Bankruptcy Court and will no longer need court approval for contracts or business deals.
usatoday.com, "Judge approves Kodak's bankruptcy plan" Matt Daneman, Aug. 20, 2013