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The Deal: Kodak Case Done Developing

Tickers in this article: EK

NEW YORK (The Deal) -- Roughly 19 months after entering Chapter 11, former photography giant Eastman Kodak is headed out of bankruptcy protection.

Judge Alan Gropper of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan on Tuesday, Aug. 20, verbally confirmed the company's reorganization plan.

"I am very cognizant of the fact that Kodak is one of the oldest and best-known names in American business, which for many years has employed thousands and in which many have invested," Gropper said in court. "Its decline and bankruptcy is a tragedy of American economic life."

He later added, "let us take a moment to dwell on the future and the hope that the business that Kodak will be continuing in will be successful."

Debtor counsel Andrew G. Dietderich of Sullivan & Cromwell told the court "all five classes entitled to vote approved the plan by a healthy margin."

Gropper overruled several objections to confirmation from parties including U.S. Trustee Tracy Hope Davis, a shareholder and a group of retirees.

Davis had taken issue with future emergence awards for certain Kodak executives included under the plan.

A group of 11 retirees had asserted that they were entitled to an administrative claims, which the judge has also rejected.

Finally, a shareholder appeared before the court to add to testimony made by other equity holders at an Aug. 5 hearing. The shareholders questioned Kodak's valuation of its business, asserting they were entitled to a recovery.

"I cannot decree a larger payment for creditors or any payment to shareholders if the value is not there, and there is no evidence that there is," Gropper said at the hearing.

Dietderich said the company hopes to emerge from bankruptcy as early as Sept. 3.

"Staying in bankruptcy is costly on many levels, and we are hoping to emerge as soon as possible," Dietderich said.

Dietderich explained during the hearing that Kodak initially intended to resolve several objectives during its bankruptcy, including capitalizing its business appropriately, receiving the highest value for its intellectual property, resolving its legacy debt and refocusing on the more valuable aspects of its business.