Judge Says Kodak Retirees Can Form An Official Committee
Last update: 4/16/2012 3:50:37 PM
By Joseph Checkler
Of DOW JONES DAILY BANKRUPTCY REVIEW
NEW YORK (Dow Jones)--A judge on Monday said a group of former Eastman Kodak Corp. (EKDKQ) employees could form an official committee in the company's bankruptcy case, giving the retirees a more powerful voice in the proceedings as Kodak continues to ponder ways to cut costs related to retiree pension and health benefits.
Judge Allan L. Gropper of the U.S. Bankruptcy Court in Manhattan approved the formation of a committee, with a compromise on the issue of the fees that the committee can rack up.
"The retirees clearly need a committee," Gropper said. The judge did say there would be an "initial" $50,000 cap on the committee's monthly fee usage, per Kodak's request, but that it could come back to court if it needs more.
Both the retirees and Kodak's public shareholders had railed against the photography icon's attempt to impose a cap. So did Tracy Hope Davis of the U.S. trustee's office, the federal bankruptcy watchdog. The committee would have been forced to operate on too skimpy a budget to operate at its best, the objectors had said. Being granted official committee status allows a group to tap into the fee pool available to professionals in the case.
Kodak earlier this month backed off a proposal to cut $233 million from its balance sheet by ending supplemental Medicare coverage available for retired employees 65 years and older, pending the court's appointment of a retiree committee. Gropper in March said he wouldn't rule on the cuts until the retiree committee issue was settled.
The shareholders, which call themselves the ad-hoc equity committee, also want to form an official committee in the case, but that's a matter for a hearing set for this Wednesday. A lawyer for the shareholders spoke in court Monday and said he wanted Gropper to push back a decision on the retiree committee until Wednesday, but Gropper disagreed. The shareholders disagree with Kodak's position that when its reorganization is complete, there's little chance anything will be left for equity holders.
Kodak on Monday also said it has gotten a "higher and better" offer for the lease on its giant billboard in Manhattan's Times Square from the billboard's owner, Clear Channel Outdoor Holdings Inc. (CCO). A Kodak lawyer asked for time to ponder the offer, pushing back what would have been a request to auction the lease. While Kodak didn't get into price, the offer trumps a $3.7 million lead bid by advertising firm Orange Barrel Media, which already operates two LED billboards in Times Square.
The company said it no longer needs the 40-foot video screen to advertise its products now that it's withdrawing from its once-core digital photo business.
Kodak was at first going to reject the billboard lease, but prospective buyers quickly emerged. The company had scheduled a Wednesday hearing to return to court seeking Gropper's permission to put the lease up for sale as well as to strike a current lease term limiting the billboard's use to advertising of certain Kodak products, but since Clear Channel's Spectacolor unit already owns it, that request could soon become moot.
Kodak in January filed for Chapter 11, and the company has until June to file procedures for an auction of its digital-imaging patent portfolio, which it estimates to be worth between $2.2 billion and $2.6 billion. The tight timetable is dictated by its $950 million bankruptcy loan, which sets certain benchmarks for Kodak to meet so it can keep using the money.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Joseph Checkler, Dow Jones Newswires; 212-416-2152; joseph.checkler@dowjones.com
(END) Dow Jones Newswires
April 16, 2012 15:50 ET (19:50 GMT)
