The iconic 131-year-old Kodak Company filed for Chapter 11 bankruptcy protection in New York on January 19th, after the struggling photographic film pioneer ran short of the cash needed to fund its much publicised restructuring.  The former blue chip has secured $950 million in financing from Citigroup Inc. to help keep it afloat during bankruptcy proceedings.  Kodak’s non-U.S. subsidiaries were not part of the bankruptcy filing.

Eastman Kodak, one of America’s best-known companies, has been one of the most innovative photography companies for more than a century from the invention of film stored in rolls to the creation of the first digital camera. The Rochester, New York-based company, which dates back to 1880s, led the way in popularising the cameras, slide projectors and home videos that preserved the memories of generations of Americans. The firm invented the hand-held camera and helped bring the world the first pictures from the moon. However, it has struggled for decades to cope with the emergence of competitors in its film business and to adapt to the rise of digital cameras from China, which destroyed much of its traditional business.

The decision to seek bankruptcy comes at a time when Kodak’s value has fallen to $150m from more than $30bn just 15 years ago. Indeed, at the end of September 2011, the group recorded total assets of $5.1 billion and liabilities of $6.75 billion. A decade ago, the firm employed 70,000 people, but in recent years the payroll has shrunk to below 19,000.

The loan and bankruptcy protection from U.S. trade creditors may give Kodak the time it needs to find buyers for some its remaining value and to reshape its business while continuing to pay its remaining workforce. The firm has been trying to sell the 1,100 digital imaging patents it licenses for use in mobile and other devices, as well as printers.

Chairman and chief executive Antonio Perez said in a statement:

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. Now we must complete the transformation by further addressing our cost structure and effectively monetising 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.”

Mr Perez said the company had moved away from its traditional film operations, “closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003″.

A chronology of Kodak’s 130 year history can be found on the Telegraph website as well as this recent video interview with Kodak’s Europe, Africa and Middle East Managing Director Philip Cullimore. In the interview Cullimore discusses the company’s turnaround strategy after a difficult couple of years. The strategies presented included innovation, acquisitions and collaborations and the licencing of revenues and patents, which he hoped would save the business. Unfortunately, it now appears this optimism was misplaced.

IB-style questions

1.  Distinguish between bankruptcy and liquidation

2.  Explain the effects on the Kodak group having recorded total assets of $5.1 billion and liabilities of $6.75 billion in September  2011

3.  Analyse the impact of technology change on the business objectives and strategy of Eastman Kodak

4.  Watch the interview with Philip Cullimore and evaluate why Kodak’s turnaround strategy was not successful.

Essay/Assignment title

To what extent was Kodak’s bankruptcy the result of a change in the external environment, and to what extent was it poor management.


US camera pioneer Kodak files for bankruptcy


Sky News – Eastman Kodak In Depth

Kodak: 130 years of history – Telegraph

Video: Kodak: life after film – Telegraph

Kodak files for bankruptcy, secures $950 million lifeline | Reuters