Eastman Kodak Company (PINK:EKDKQ) will cut down on the benefits paid to retirees as part of its restructuring program. The century-old photography pioneer has been pursuing a restructuring program to help it overcome the recent bankruptcy.
As a part of the plan agreed on by an official committee of retirees, medical, dental, life insurance and survivor income benefits, amounting to $10 million per month, will be scaled back at the end of the year. The photography pioneer revealed in a statement that it will provide the committee with a $7.5 million cash payment, a $635 million unsecured claim and a $15 million administrative claim to cover the $1.2 billion liability. A company spokesman said pensions would not be affected.
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The company said the other benefits cost about $10 million monthly and the change was prerequisite for emerging successfully from Chapter 11 protection. A hearing on the agreement has been scheduled for Oct. 29.
The official committee of retirees, which represents about 5,000 Eastman Kodak Company (PINK:EKDKQ) retirees, said it was surprised and disappointed by the proposal, which would affect about 56,000 retirees, dependents and survivors.
Eastman Kodak Company (PINK:EKDKQ) said it “recognizes this action will pose challenges for retirees. This agreement is one of the many necessary steps to put the company on a path to emerge as a profitable, sustainable company” and added that the agreement, “eliminates the need for costly and lengthy litigation”.
The Rochester, New York-based company, started in 1892, pioneered and popularized cameras, film, slide projectors and home videos. Eastman Kodak Company (PINK:EKDKQ) filed for bankruptcy in January, and has planned to slash some 3900 jobs by the end of the year. As a part of the restructuring plan, company intends to sell off its consumer film business and focus on digital printing, graphics, and entertainment and commercial films. At its peak in 1980’s, company employed around 145,000 workers, but, owing to consistent poor performance in the age of digital cameras, the company has been forced to lay off thousands of employees and close 13 manufacturing plants and some 130 processing labs since 2003.
Art Roberts, spokesman for the association EKRA said that they are still not sure how to block the change, aside from arguing the official retiree committee named by the court doesn’t fully represent the interests of all retirees.
Kodak said more information about how they will be affected will be given to beneficiaries in coming weeks, and the agreement has also got the backing of the official committee of unsecured creditors.