Eastman Kodak, once a mighty photography pioneer, earned court approval on Tuesday for a plan to exit bankruptcy as a much smaller digital-imaging company.
The green light from U.S. Bankruptcy Judge Allan Gropper in New York puts Kodak on track to exit bankruptcy in about two weeks.
"It will be enormously valuable for the company to get out of Chapter 11 and hopefully begin to regain its position in the pantheon of American business," Gropper said.
Kodak, based in Rochester, New York, was for years synonymous with household cameras and family snapshots. It filed a $6.75 billion bankruptcy in January 2012, weighed down by high pension costs and a years-long delay in embracing digital camera technology.
It has sold off assets, including its consumer-focused operations, and will emerge from Chapter 11 to focus mainly on commercial products such as high-speed digital printing technology and flexible packaging for consumer goods.
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It will mean a lower public profile for Kodak's iconic name and its expected revenues, about $2.5 billion, are roughly half of what it had when it filed for Chapter 11.
In bankruptcy, Kodak failed to obtain significant value for its portfolio of patents, which experts said was a key reason it had to sell core businesses and reinvent itself. But the bankruptcy resolved a major dispute with retirees over pensions, and it has forged a restructuring plan that, while wiping out shareholders, should pay secured creditors and second-lien noteholders in full.
General unsecured creditors are likely to receive a marginal payout in the neighborhood of 4 cents to 5 cents on the dollar.
"This comes on a day when many are losing retirement benefits, and many are finding that their recovery as a creditor is just a minute fraction of what their debt is," Gropper said. "But I cannot decree a larger payment for creditors or any payment for shareholders if the value is not there."
Kodak plans to emerge from bankruptcy as early as Sept. 3, its attorney, Andrew Dietderich, said at a hearing on Tuesday in U.S. Bankruptcy Court in New York.