News of the Kodak (NYSE:EK) Chapter 11 filing is obviously creating ripples throughout the mainstream press. But closer to home, as one of the founders of both AIIM (back in the NMA days) and as an icon in the document management industry, Kodak’s filing highlights for me the challenges implicit for any organization as they try to navigate the complicated waters of the digital age.
[Editor’s note: as neither a legal nor a financial genius, please cut me a bit of slack me as I think through the implications of the filing for our industry.]
Here’s how I understand what is going on.
First, here’s some information straight from a microsite that Kodak has set up to discuss the reorganization. (Additional information can be found at http://www.Kodaktransforms.com.)
On January 19, 2012, Eastman Kodak Company and its U.S. subsidiaries filed voluntary petitions for Chapter 11 business reorganization in the U.S. Bankruptcy Court for the Southern District of New York. The business reorganization will enable Kodak to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacyliabilities, and enable the Company to focus on its most valuable business lines. Non-U.S. subsidiaries are not part of the filings, are not subject to the Court proceedings, and are operating as usual.
The filing frees up $950 million in funds from Citigroup (plus the cash that is already on hand) to continue operations within the Chapter 11 framework. This is in the context of a business plan moving forward that has been approved by the court.
I would imagine that news of the filing must come with some amount of relief for folks in the document management group given that uncertainty is always the least desirable position to be in. Per Kodak, the document management business has been strong. However, given that results for this business are not broken out separately from the rest of the company, whatever these results are, they have clearly been masked by the troubles of the rest of the company.
Prior to the reorganization, Kodak tried to sell its portfolio of consumer digital capture assets to free up cash. Getting a buyer to agree on the pricing of these assets must have been challenging in the uncertainty prior to the filing (likely the understatement of the week). With the path forward at least clear now, it appears the sale of these assets will move forward.
These kind of Chapter 11 processes normally last about 18 months. Kodak last week restructured its business from three to two major operating units, one consumer focused and one commercial. Within the commercial segment, there are now three major pieces: 1) Enterprise Services and Solutions Group (under which the document management business operates); 2) Graphics and Entertainment and Commercial Film, and 3) Digital and Functional Printing Group.
Technology continues to roll over and around segments and companies that were once considered invulnerable, either 1) sweeping them away or 2) leaving them dramatically transformed in its wake. The next 18 months and a new start will determine which result will be Kodak’s future.
-----
Recent Comments