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Eastman Kodak Co. on Monday received approval in U.S. Bankruptcy Court to end U.S. retiree health care and other benefits effective Dec. 31.
U.S. Bankruptcy Court Judge Allan Gropper approved the agreement reached last month.
Kodak said in a statement released late Monday afternoon that it is pleased the court approved its agreement with the Official Committee of Retired Employees that provides for a comprehensive resolution of its U.S. retiree health care and survivor benefits liabilities.
“The agreement, which also has the support of our Official Committee of Unsecured Creditors and the Ad Hoc Committee of Second Lien Holders, will significantly reduce one of the company’s most substantial legacy liabilities, marking another major step toward Kodak’s successful emergence from Chapter 11,” Kodak said.
It currently costs Kodak some $10 million a month, the company said last month. The retiree benefits program includes medical, dental, life insurance and survivor income benefits. It does not include pension benefits.
“Kodak understands and appreciates the contributions of our retirees, acknowledges the difficult and hard work of the 1114 Committee and recognizes that this action will pose challenges. However, this agreement is one of the many necessary and critical steps to put the company on a path to emerge as a profitable, sustainable company.”
Kodak said Oct. 10 it had reached the agreement in principle with the Official Committee of Retirees, also known as the 1114 Committee.
In satisfaction of its $1.2 billion retiree benefits liability, Kodak will provide the committee with a $7.5 million cash payment to support initial administration and benefit obligations, a $635 million unsecured claim and a $15 million allowed administrative claim that would have priority status in Kodak’s reorganization proceedings, the company said last month. The funds can be used at the committee’s discretion to make payments to retirees to subsidize a limited portion of future benefit costs.
Kodak said the proposed agreement results in significant cost savings and liquidity enhancement and eliminates the need for costly and lengthy litigation. Ultimately, through the allowed claims process, the retirees’ recovery is linked to Kodak’s successful reorganization.
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