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Kodak files for bankruptcy: restructuring and patent suits

After a long decline, Kodak is filing for Chapter 11 bankruptcy. The company had $5.1 billion in assets and $6.75 billion in debt as of September 30th, 2011, and its remaining value is mostly in patents, which it is currently trying to sell off and enforce. Kodak is expected to continue operating during bankruptcy proceedings.Image credit: Liz Higgs (Flickr)

  • Adi Robertson

    Sep 3, 2013

    Adi Robertson

    Kodak officially exits bankruptcy, emerges as a commercial printing company

    via puu.sh
    via puu.sh

    As expected, former camera-making company Kodak has climbed out of the Chapter 11 bankruptcy it entered in January of 2012. In a press release, the company says it finished its restructuring today, canceling its old stock and giving creditors a new set of shares. It's the culmination of nearly two years of planning, as Kodak steadily sold off assets and pared down its workforce to emerge as a tightly focused business that had lost its best-known segment: the consumer camera business that it started phasing out early last year. Kodak's website appears to still be in transition, showing the image above.

    Having spun off or shut down its various consumer divisions, including digital camera and printing segments, Kodak will focus instead on commercial printing for packaging and other large-scale projects. To fund this transition, it sold off a roughly half-billion dollar patent portfolio and received $844 million in financing; its billions of dollars of debt were also reduced by issuing stock at a drastically reduced dollar amount for creditors. The company has roughly stuck to its restructuring timeline — it initially planned to emerge from bankruptcy in mid-2013 — and it crossed the last major hurdle in late August, when a court approved its bankruptcy plan and expressed hopes that a formerly iconic brand would recover some of its past glory.

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  • Adi Robertson

    Aug 20, 2013

    Adi Robertson

    Kodak's plan to escape bankruptcy gets court approval

    Kodak (STOCK)
    Kodak (STOCK)

    Struggling photography company Kodak has made another step towards exiting Chapter 11 bankruptcy. Today, a New York judge approved a plan to emerge from bankruptcy, reducing its debt by $4.1 billion. Earlier this year, a court approved $844 million in financing for Kodak, and the company sold a hefty patent portfolio for over $500 million in 2012. As Kodak exits bankruptcy, it's offering creditors a much-reduced repayment on $2.2 billion in debt; to help finance its recovery, it also needs to sell $406 million in stock.

    Judge Allan Gropper, who approved the plan, was sympathetic to Kodak and its plight, seeing it as a symbol of larger problems with the national economy. "Kodak is one of the best-known names of American business," Bloomberg quotes him as saying. "Its decline in bankruptcy is a tragedy of American economic life. I've reviewed dozens of letters from Kodak shareholders asking how the company in which they invested fell so far."

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  • T.C. Sottek

    Jan 23, 2013

    T.C. Sottek

    Kodak plans to emerge from bankruptcy this year as court approves $844 million in financing

    Kodak Logo
    Kodak Logo

    When Kodak filed for Chapter 11 bankruptcy in January of last year, it estimated that it would recover by mid-2013. Thanks to a court ruling today that approved new financing, the company appears close to fulfilling its plan; Kodak writes in an release announcing the court decision that the $844 million in financing will help the company exit bankruptcy mid-year. The approval follows a number of measures Kodak has taken in the last year as part of its reorganization, including a $525 million patent sale, the sale of its film and kiosk divisions, an exit from the consumer printing business, and a licensing deal that lends the Kodak name to products from JK Imaging. As Bloomberg reports, Kodak attorney Andrew Dietderich said that the company's "financial picture is a stark contrast to the company that filed for Chapter 11 this time last year." The company says it is in the final phase of its restructuring.

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  • Adi Robertson

    Dec 19, 2012

    Adi Robertson

    Apple and Google benefit as Kodak sells patents for $525 million

    kodak logo
    kodak logo

    Kodak, which filed for bankruptcy in early 2012, has successfully sold off its imaging patent portfolio, one of its last remaining assets. In a release today, Kodak announced that it had agreed to transfer its imaging patents to Intellectual Ventures and RPX Corporation, a pair of patent licensing groups. In return, it will receive $525 million, something Kodak CEO Antonio Perez says will let the company "repay a substantial amount of our initial [bankruptcy financing] loan, satisfy a key condition for our new financing facility, and position our Commercial Imaging business for further growth and success."

    The deal has yet to be approved by the bankruptcy court, but if it goes through, the money will be paid by 12 separate licensees organized by Intellectual Ventures and RPX. Apple and Google had previously been said to be teaming up to get control of the patents, something that fits with this deal — Google is a current client of RPX, and Apple is involved with Intellectual Ventures. As part of this agreement, Kodak is also agreeing to settle patent suits between it and the participants — it's had a long legal battle with Apple, which previously attempted to stop the patents' sale, and has also been involved in suits against Samsung and others, who may or may not be part of this deal.

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  • Bryan Bishop

    Dec 8, 2012

    Bryan Bishop

    Apple and Google reportedly team up for Kodak patent bid

    kodak logo
    kodak logo

    Smartphone competitors Apple and Google may be teaming up to gain control of a trove of imaging patents from former film heavyweight Kodak. Bloomberg reports that the two companies were behind a bid of more than $500 million earlier this week for Kodak's 1,100 imaging patents. Kodak, which filed for bankruptcy earlier this year, had attempted to use its patent portfolio to sue several companies as its business prospects dwindled. Ironically enough, Apple claimed it had ownership of several of the patents — a move which eventually led to Kodak suing Apple for trying to block the patent auction.

    It's not uncommon for companies to team up for this sort of group bid; a consortium that included Microsoft, Apple, and Research In Motion joined forces last year to buy a collection of Nortel patents for $4.5 billion. Of course, the battle between iOS and Android puts a collaboration between Apple and Google in slightly different territory — in fact, the Nortel patent purchase came at the expense of Google, which was outbid by the larger group. It's not clear whether the alleged team-up is the result of simple convenience or the result of a different demeanor on Apple's part as Tim Cook makes the company his own. According to Bloomberg, both Apple and Google had assembled different consortiums earlier in the year — Apple with Microsoft, and Google with certain Android OEMs — before deciding to join forces directly. Whether the bid will end up being accepted still remains to be seen.

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  • Nathan Ingraham

    Sep 28, 2012

    Nathan Ingraham

    Kodak planning to exit consumer printing business as bankruptcy restructuring continues

    Kodak printer
    Kodak printer

    Kodak today announced it would cease the sale of consumer inkjet printers and cut a total of 1,200 jobs, up from the 1,000 previously announced, as the company works to restructure its business after filing for bankruptcy earlier this year. The company believes this will help increase cash flow in the US, and said that it would help focus on its transformation into a company focused on commercial, packaging & functional printing solutions and enterprise services. This appears to be an about-face to the plans Kodak outlined in February, when the company said it would focus on photo printing products and desktop inkjet printers going forward — now, it seem that the Kodak brand will be largely absent from the consumer marketplace. That said the company does plan to continue supporting the large installed base of Kodak printer users by still selling supplies like ink. While Kodak still has plenty of work ahead of it, the company reiterated its plans to emerge as a "profitable, sustainable company" in 2013.

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  • Scott Lowe

    Aug 24, 2012

    Scott Lowe

    Kodak announces plans to sell film, commercial scanner, and kiosk divisions

    ektachrome
    ektachrome

    As part of its ongoing recovery efforts after filing for Chapter 11 bankruptcy, Kodak has announced its plans to sell its film, commercial scanner, and photo kiosk businesses. The proposed sale will fall alongside the company's current digital imaging patent auction, which it hopes will yield a return profitability and guide the iconic brand out of bankruptcy. As part of its larger reorganization plans, Kodak is moving away from the consumer market and will instead focus on commercial packaging and printing products. Despite seemingly abandoning most of its photography divisions, Kodak says it isn't abandoning its legacy and promises to find a buyer with similar interests:

    While no further insights about the status of the sale were provided, Kodak hopes to emerge from bankruptcy sometime next year.

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  • Adi Robertson

    Jul 22, 2012

    Adi Robertson

    ITC dismisses Kodak patent claim against RIM and Apple

    kodak logo
    kodak logo

    Kodak's plan to recoup its losses by leveraging valuable patents has just been shaken, as the International Trade Commission has dismissed claims that RIM and Apple are infringing on a technique for previewing images. The case was filed in 2010, with Kodak claiming that the iPhone and BlackBerry's cameras violated the '218 patent, which covered techniques for displaying still images before and after taking a picture. Now, the ITC has upheld its judge's previous finding that the patent was invalid.

    Kodak filed for bankruptcy earlier this year, and it's relying on patent sales to help it restructure. The '218 patent has allegedly been one of its most lucrative, and Kodak has previously asserted claims against Sony, JVC, Samsung, LG, and Fujifilm as well as RIM and Apple. Apple, however, has claimed ownership of it, leading to a countersuit. Kodak has won the right to sell off the patents, but this recent decision could affect the outcome of its auction.

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  • Sam Byford

    Jul 6, 2012

    Sam Byford

    PSA: Kodak Gallery begins transition to Shutterfly, some user accounts unavailable

    shutterfly
    shutterfly

    Kodak sold off its Gallery online photo sharing service to Shutterfly as part of ongoing restructuring efforts, and the transition is now taking place. Kodak Gallery has closed for business, with users unable to view their photos until their accounts have been transferred to Shutterfly. How long will that take? Well, that's the real question — Shutterfly CIO Geoffrey Weber tells the LA Times that the most active users will get priority and should be moved over within a couple of weeks, with less frequent users likely having to wait one or two months.

    You should be good if you've already linked your Kodak Gallery to a new Shutterfly account yourself, but the page that lets you do that has been unavailable since Monday. It's expected to be restored later this week, and once you manage to get your Shutterfly account up and running you'll be able to make 50 free prints. The transition involves moving around 5 billion photo files from service to service, so it's not surprising that it can't all be done overnight. Once complete, Kodak will no doubt want to concentrate on selling off its patents and fixing its precarious financial situation.

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  • Amar Toor

    Jul 3, 2012

    Amar Toor

    Kodak wins clearance to sell digital imaging patents

    kodak logo
    kodak logo

    "The Apple and FlashPoint claims are baseless and Kodak will still seek dismissal on summary judgment in July," said Timothy Lynch, Kodak's Vice President and Chief Intellectual Property Officer. "However, today’s ruling provides a Court-approved process allowing buyers to acquire the patents free and clear of all ownership allegations, regardless of the status of the dispute with Apple and Flashpoint at the time of closing." Lynch went on to thank the court for enabling "us to move ahead with our patent auction in a timely manner and with clarity on ownership for the winning buyer." Kodak plans to open its auction in August.

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  • Nathan Ingraham

    Jun 19, 2012

    Nathan Ingraham

    Kodak sues Apple for interfering in patent portfolio sale

    Kodak (Flickr)
    Kodak (Flickr)

    Kodak's patent sale is a major part of the company's plan to restructure after filing for bankruptcy early this year, but Apple quickly threw a wrench into that plan by claiming ownership of some key digital camera patents that Kodak was hoping to sell. Nearly six months have passed, but Kodak has finally prepared a response — the company just filed a lawsuit that states Apple wrongly claims to own 10 patents that came out of joint projects between the two companies back in the 1990s. Kodak is even asserting that Apple itself continues to infringe on Kodak's patents, saying that "Apple is the single largest infringer of patents in the Digital Capture Portfolio and also a potential purchaser of those patents." It's not clear whether this means that Apple approached Kodak about buying its patents, or that Kodak simply anticipates Apple will have interest in the eventual auction.

    In its complaint against Apple (and second defendant FlashPoint Technology), Kodak cited a number of reasons for believing that it should be free to sell its patents — one significant defense is the fact that Kodak has generated more than $3 billion in revenue since 2001 by licensing these patents. The company also noted that "Apple's strategy has been to use its substantial cash position to delay as long as possible the payment of royalties to Kodak, and to interfere with the Debtors' planned section 363 sale of the Digital Capture Portfolio." Furthermore, Kodak also pointed out that Apple "had a full and fair opportunity to obtain discovery and prosecute its ownership claim" back in 2010, but nothing came out of that opportunity.

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  • Adi Robertson

    Apr 27, 2012

    Adi Robertson

    Kodak sees revenue drop 27 percent in Q1 2012, reports $366 million net loss

    Kodak Playfull
    Kodak Playfull

    After filing for bankruptcy in January, Kodak has released its financial report for the first quarter of 2012. Kodak's total revenue was $965 million, a decline of 27 percent from Q1 2011. Among other things, the company ties this decline to its decision to stop producing digital cameras in February. Despite that, it's actually losing slightly less money now. Kodak's consumer branch lost $164 million in the first quarter of this year, compared to $187 million lost in the same period last year, and the commercial branch lost $64 million, about $3 million less than in Q1 2011. A solid chunk of that seems due to cost-cutting: Kodak has reduced its operating costs by $84 million compared to Q1 of 2011.

    Despite this cost-cutting and a focus on the more profitable printing industry, where Kodak recently joined forces with Samsung, we'd hesitate to say things are looking up. The company reported a $366 million net loss this quarter, compared to $246 million at the same time in 2011. Kodak says this largely reflects the costs of restructuring and the lack of major asset sales, but it's still carrying a lot of debt that it has yet to make up in revenue. On the bright side, it increased its liquid assets from $500 million at the end of 2011 to $1.4 billion presently, largely as a result of new financing and the bankruptcy proceedings. It also saw a 34 percent increase in "consumer inkjet ink revenues," so at least its new chosen industry is doing well.

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  • Sam Byford

    Apr 26, 2012

    Sam Byford

    Shutterfly to proceed with Kodak Gallery purchase after no rival bids appear

    shutterfly
    shutterfly

    Kodak announced plans to sell off its Gallery online business to photo-sharing service Shutterfly last month subject to a stalking horse agreement where other bidders could come in with an offer. It turns out that no competing bids materialized, as first reported by the Wall Street Journal, and so subject to approval by the bankruptcy court Shutterfly will be allowed to make the purchase for $23.8 million. While Shutterfly made $473 million in revenue last year and is looking to expand, Kodak Gallery reportedly never made a profit despite having over 75 million users. Those customers based in North America will be automatically transferred over to the new service. The sale comes as Kodak continues to restructure and focus on its home printing business after filing for bankruptcy back in January.

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  • Sam Byford

    Mar 3, 2012

    Sam Byford

    Kodak stops producing slide film due to lack of demand

    ektachrome
    ektachrome

    Following the demise of Kodachrome, Kodak is stopping the production of its other color reversal films. Inventories of Ektachrome E100G, E100VS, and Elite Chrome Extra Color are expected to last from six to nine months, though Kodak will still be producing its E-6 processing chemicals. The company said that the move was due to dropping customer demand and complex manufacturing issues, and has essentially left Fujifilm as the sole remaining player in the market.

    Color reversal film, commonly called "slide film," is even more of a niche product than standard color negative film these days — its primary uses are in projectors and professional print work, though more recently it's been popular with lo-fi photographers who use it for cross-processing. Kodak's extraneous businesses have been dropping like flies in the company's continuing efforts to restructure following bankruptcy, but the decline in film products' popularity probably won't come as much of a surprise.

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  • Sam Byford

    Mar 2, 2012

    Sam Byford

    Kodak plans to offload Gallery online photo service to Shutterfly

    kodak logo
    kodak logo

    As part of its continuing bankruptcy restructuring, Kodak has entered into an agreement to sell its online photo services business to Shutterfly for $23.8 million. The move will mean that the accounts and uploaded images of current Kodak Gallery customers in North America will be transferred to Shutterfly, though customers will be able to opt out. Shutterfly is a "leading social expression and publishing service" that will benefit from Kodak Gallery's userbase of over 75 million, though the deal isn't set in stone — it's a stalking horse agreement, meaning that other buyers may seek to make superior bids upon auction at a later date.

    When filing for bankruptcy, Kodak expressed a desire to "focus on its most valuable business lines," and the sale of Kodak Gallery follows the offloading of its image sensor division and the cessation of digital camera production. It sounds like the retail and home printing business is about the only thing left making a profit for Kodak — we'll have to see if that model will be enough to sustain the company in the long-term.

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  • Sam Byford

    Feb 16, 2012

    Sam Byford

    Kodak gets the go-ahead for $950 million bankruptcy financing

    kodak logo
    kodak logo

    Kodak has won approval to borrow $950 million to finance its restructuring process, after filing for bankruptcy last month. The confirmation of the funding should allow the company to continue operating while it considers how to move forward. Kodak received the full amount it had requested despite some legal manuevering from Apple, which wanted to ensure that any Kodak assets that could be involved in patent disputes wouldn't be used to secure the financing. CEO and Chairman Antonio M. Perez said:

    The key point there is "monetize our non-strategic intellectual property." The decline of film photography and Kodak's failure to keep up with the transition to digital means that it doesn't have much in the way of compelling consumer products — the company has taken to offloading divisions and suing competitors from Apple to Samsung in recent attempts to raise revenue. None of this amounts to a long-term business plan, however, and Kodak will need to think hard about how it plans to survive beyond raising temporary liquidity.

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  • Nathan Ingraham

    Feb 9, 2012

    Nathan Ingraham

    Kodak will cease production of digital cameras to focus on more profitable products

    Kodak Duaflex IV
    Kodak Duaflex IV

    In the wake of its bankruptcy filing last month, Kodak is reportedly ceasing all production of digital cameras, pocket video cameras, and digital photo frames to focus on photo printing products and desktop inkjet printers going forward. This decision was made so the company could focus on the parts of its business that are most profitable, with the moves expected to save the company more than $100 million annually. This phase-out will happen over the first half of 2012, with Kodak working with retailers to ensure an orderly transition; the company will also continue to honor warranties and provide technical support for discontinued products. While it sounds like this decision makes strong business sense for the ailing company, it's still sad to see one of the world's best-known camera brands exit the market.

    Update: Kodak just issued a press release containing more details on its new strategy. While the company plans to "phase out its dedicated capture devices business," it also mentions that the company will "expand its current brand licensing program, and seek licensees in these categories." So, we might not have seen the last of cameras bearing the Kodak brand, though it sounds like company itself won't be making the hardware. Kodak also said it would continue to focus on its commercial business segment as well, which the company says makes up about 75 percent of its total revenue.

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  • Matt Macari

    Jan 21, 2012

    Matt Macari

    Apple claims ownership in key Kodak patents on digital camera technology

    QuickTake
    QuickTake

    Apparently Eastman Kodak's bankruptcy filing this week wasn't a surprise to anyone: just hours after Kodak filed in New York, Apple sought authority from the court "to enter into a $950 million postpetition financing facility secured by security interests in and liens upon substantially all of Kodak's assets." In essence, Apple is claiming to have ownership over key Kodak patent assets, including US Patent No. 6,292,218. According to Apple, this patent has been pivotal in driving Kodak's recent patent licensing strategy, providing over $3 billion in associated revenue. The '218 patent has been asserted by Kodak against Sony, JVC, Samsung, LG, RIM, Fujifilm, and even Apple — the patent claims priority back to 1994 and covers a color digital still camera having a display for viewing captured images.

    Apple argues in its court filing that it worked with Kodak back in the early 1990s on the commercialization of digital camera technology, only to learn in 2010 that Kodak had "misappropriated Apple's technology and sought patents of its own claiming this technology." While it's impossible based on the limited information in this court filing to accurately examine the discrete contributions Apple and Kodak made to this technology area, it is interesting to note that both companies actively hit the market with consumer-level cameras having LCD viewers in the mid-1990s — Apple with its QuickTake line and Kodak with its DC series of cameras.

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  • Sean Hollister

    Jan 19, 2012

    Sean Hollister

    Kodak files for Chapter 11 bankruptcy

    Kodak
    Kodak

    Patent lawsuits won't save Kodak from an overhaul, it seems: as predicted, the photography company just announced that it's filed for bankruptcy. Kodak says it's voluntarily filed for Chapter 11 reorganization in New York, in order to "bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the Company to focus on its most valuable business lines." It's also tentatively obtained $950 million in debtor-in-possession credit so it can keep operating while it formally goes bankrupt: the company says it expects to keep paying employees, serving customers and honoring obligations for the time being.

    Kodak's set up a website at www.kodaktransforms.com to discuss the Chapter 11 filing further, but as of right now the site's asking us for a login and password. It's up now, and you can also find the company's full press release below.

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  • Dieter Bohn

    Jan 19, 2012

    Dieter Bohn

    Kodak files complaint against Samsung for patent infringement

    Kodak Logo
    Kodak Logo

    Kodak has taken the same patents it is already using in a lawsuit against Apple and HTC and applied them in a lawsuit against Samsung — with one more tossed in for good measure. The four main patents in question are all related to transmitting digital images, while the fifth is entitled: "Electronic Camera For Initiating Capture of Still Images While Previewing Motion Images." Kodak filed suit in the Western District of New York, and as with any patent case in the US, it is likely going to be quite a long time before we see whether these patents will hold up or how this case will shake out.

    Kodak may not actually have that kind of time, as recent reports suggest it will be seeking Chapter 11 bankruptcy protection within a matter of weeks. Kodak hasn't specified the exact resolution it's seeking in its court case against Samsung, but it's probably a safe bet that the actual resolution it's looking for is a clean (and perhaps profitable) licensing agreement.

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  • Joseph Parish

    Jan 10, 2012

    Joseph Parish

    Kodak sues Apple and HTC for infringing digital imaging patents

    Kodak
    Kodak

    Eastman Kodak may be going bankrupt, but it's making a last-ditch effort to raise revenue before facing its creditors; the company announced today that it's suing both Apple and HTC for infringing patents related to capturing and transmitting digital images. Kodak has filed complaints with the International Trade Commission (ITC) and in its legal hometown of the Western District of New York. While the ITC complaint seeks to prevent importation of a long list of "infringing" devices by HTC, the US lawsuit asks the court to permanently prevent further infringement and recover damages. The company says it's open to "negotiating a fair and amicable agreement with these companies," but it will "defend the interests of shareholders and licensees" in the face of persistent infringement.

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  • Nathan Ingraham

    Jan 4, 2012

    Nathan Ingraham

    WSJ: Kodak preparing to file for bankruptcy in the next few weeks

    Kodak camera FLICKR
    Kodak camera FLICKR

    It sounds like Kodak's long, slow decline is about to end in bankruptcy: The Wall Street Journal is reporting the company plans to file for Chapter 11 bankruptcy protection in the next few weeks if its efforts to sell off a wide variety of digital patents fail to pay off. This comes after a November securities filing warning that Kodak would soon run out of money unless its patents were sold off or it found a loan; more recently the New York Stock Exchange said that Kodak could be delisted unless its stock (which has been trading for less than one dollar for the last month) rebounded in the next six months. Even if the company does file for bankruptcy, its patents will be sold off in a court-supervised auction, while the company will be able to pay bills and continue to operate — hopefully this includes keeping its workforce of 19,000 employees.

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