It's interesting what's changed and what's not.
I assume that filing chapter 11 was needed in order for Kodak to secure the $950 million loan.
Kodak says they have filed for Chapter 11 reorganization to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property (they were already trying to do that), fairly resolve our legacy costs (this is new), and enable the Company to focus on our most valuable business lines (they were already trying to do that).
What are the legacy costs? Kodak says: "These liabilities include but are not limited to non-U.S. pension liabilities; current and non-current Other Post-Employment Benefit (“OPEB”) liabilities; and environmental liabilities.
We now need to ensure that legacy costs are right-sized and fairly apportioned for a company of Kodak’s size in order to maintain a competitive cost structure."
So how are the legacy costs being right-sized and fairly apportioned?
"Retiree Post-Employment Benefits
You may be receiving health care, dental, life insurance or survivor income benefits from Kodak. While we do not expect any immediate changes to these plans as a result of the filing today, Kodak needs to ensure that our legacy cost structure – including these retiree benefits – is fairly apportioned and scaled for a company of the size we are today. Therefore, we want [to] adjust them. Any changes in benefits will be addressed under the supervision of the Court, and we will inform you as additional information becomes available."
And then:
"If you were classified as highly compensated under the Tax Code during your employment with Kodak, you also may be receiving supplemental pension benefits under the Kodak Excess Retirement Income Plan (KERIP) or the Kodak Unfunded Retirement Income Plan (KURIP). These are unfunded plans which are paid out of company assets.
Payments under the KERIP and KURIP have been discontinued as of the Chapter 11 filing date."
So the only thing that's changed in Kodak's plan to transform itself appears to be reducing the costs associated with its former, now retired, employees. Oh, and the unspecified "environmental liabilities".**
J
**Kodak has been widely criticized by environmentalists and researchers as one of the worst polluters in the United States. According to scorecard.org, a web site which collects information on corporate pollution, Kodak is the worst polluter in New York state, releasing 4,433,749 pounds (2,011,115 kg) of chemicals into the air and water supply.
The Political Economy Research Institute at the University of Massachusetts, which compiled the Toxic 100, ranked Kodak the seventh largest polluter in the United States in 2002. In 2004, the Citizens' Environmental Coalition's (CEC) of New York awarded Kodak one of its "Dirty Dozen" awards to highlight its consistently high rates of pollution.
