Kodak's bankruptcy was OK'd
on Tuesday by the U.S. Bankruptcy Court for the Southern District of New York, clearing the way for a reorganization of the company 19 months after the 133-year-old photography pioneer declared Chapter 11.
U.S. Bankruptcy Court Judge Allan Gropper approved the plan.
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"It will be enormously valuable for the Company to get out of Chapter 11, and begin to regain its position in the pantheon of American business," Gropper said in a press release.
The reorganization will allow the multinational imaging and photographic equipment company, which is headquartered in Rochester, N.Y., to resume operations as a new company essentially, USA TODAY reported
The photography pioneer filed for bankruptcy in January 2012 after suffering a significant sales drop-off in recent years.
As a result, Kodak will be shifting its business focus from photography to printing.
Kodak reported that its 2012 fourth-quarter losses more than tripled
, hitting $402 million, up from $117 million, as net sales fell 24 percent, according to regulatory filings.
In 2012, full-year net sales dropped 20 percent to $4.11 billion, reflecting what Kodak called economic weakness in some regions and businesses, currency fluctuations, and the decision to exit some businesses.
As part of the bankruptcy agreement, Kodak sold various digital imaging patents
last December for $525 million to tech companies like Apple, Google, Facebook, Amazon, Microsoft, Samsung, and Adobe Systems.
Kodak's plan relies on $895 million in loans to finance the bankruptcy exit.
The Chapter 11 financing was arranged by JPMorgan Chase & Co., Bank of America Corp. and Barclays Plc
The plan pays unsecured creditors with estimated claims of $1.6 billion to $2.2 billion a recovery of as much as 5 cents on the dollar, according to court papers.
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Existing stock will be canceled.
"This financing will enable Kodak to repay secured creditors and debtor-in-possession loans, finance its exit from Chapter 11 and meet working capital and liquidity needs," Christopher Veronda, a spokesman for Kodak, told Bloomberg News
in a telephone interview in July. "We expect the new financing proposal to provide more favorable terms to our existing loan arrangement."
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