One of the oldest photographic outfits in the world, Eastman Kodak has filed for Chapter 11 bankruptcy protection in New York.
According to the Wall Street Journal, the outfit has run out of the cash it needed to fund a turnaround. The outfit has managed to get its paws on $950 million in financing from Citigroup to help keep it afloat during bankruptcy proceedings so things are not too desperate.
Although the company is credited with the invention of the digital camera, it has been unable to cope with the rise of the technology and the competition in its film business. Lately it has been trying to sell printers, but that move is proving too expensive to set up. The company also has some expensive retirement packages which it has to service.
Chief Executive Antonio Perez, who joined the company after running the printer business at HP, was supposed to turn everything around. However Kodak lost $7 billion in market value during his rule.
Since Perez took control of Kodak in 2005, the outfit has lost money every year but one. Last year Perez's strategy of milking Kodak's patent portfolio for licensing deals ran dry and he had to sell the family silver.
Kodak put 1,100 digital patents up for sale in August but no one was interested. That was mostly because the outfit was rumoured to be going to Chapter 11 and they thought they could pick them up cheaper.
Kodak's retirees could be in trouble too as the firm could try to escape pension and health-care obligations by going to bankruptcy court.
Many do not believe the company will die. In fact Kodak said that it will continue to operate its businesses and hopes to emerge from Chapter 11 next year. The plan is to use the bankruptcy court to cut costs and sell off some of its patent portfolio.
Kodak was started in 1881 when founder George Eastman turned his experiments in his mum's kitchen into a photographic dry plates business. It had a monopoly on film, which provided high margins and a steady cash flow.