Kodak and its U.S. subsidiaries filed for Chapter 11 bankruptcy protection on January 19, 2012. While Kodak intends to continue operations during the bankruptcy proceedings, the bankruptcy could potentially affect its suppliers, customers, employees and retirees in various ways. Specific impacts will depend on individual situations and the outcome of the bankruptcy case. Kodak suppliers are not obligated to continue selling to Kodak but ongoing contracts will be addressed during the proceedings. Employees will continue receiving wages and benefits for now but these could potentially change. Retiree benefits may also be affected. Individuals should consult attorneys if they have specific legal questions about how the bankruptcy may impact their rights and interests.

1. KODAK CHAPT
K’S TER 11
BA
ANKRUPT
TCY PROC
CEEDINGG:
HO COUL IT AFF
OW LD FECT YOU
U?
M
Many of our cl
lients, both cu
urrent and form Kodak em
mer mployees, as well as vendo who do bu
ors usiness with K
Kodak, have
as
sked us how Kodak’s Chapt 11 Bankru
K ter uptcy Proceedi will affect them.
ing t
A
Although each client’s situa
ation may be different and the actual an
nswer to that question may not be know until the
y wn
ankruptcy is concluded, set forth below are some gene guidelines and informa
ba c a eral s ation which ca assist you i evaluating
an in
yo situation and potential options.
our a o
Th informatio is not inten
his on nded to provi you with any specific l
ide legal advice. Should you desire legal c
counsel with
re
egard to your particular circu
p umstance, you may contact one of our at
u t ttorneys who w be please to assist you
will ed u.
Woods Oviatt Gilman LLP
O n
700 Cro
ossroads Build ding
2 State Street
Rocheester, NY 146 614
www.wwoodsoviatt.c com
(58 987-2800
85)
GENERAL KOD BANKRU
DAK UPTCY INFORM
MATION
1. What affect will th Kodak ban
he nkruptcy hav on its oper
ve rations?
Kodak and its Unit States sub
k ted bsidiaries hav filed petitio under Ch
ve ons hapter 11 of t Bankruptcy Code. In
the
Chapte 11, a comp
er pany is permit tted to contin operation s under the su
nue upervision of a Creditors’ Committee
f
and the Bankruptcy Court while it attempts to reorganize. The compan is benefitte by the auto
e y o ny ed omatic stay,
which generally pr rohibits action by creditor to collect their pre-ban
n rs nkruptcy claim In most Chapter 11
ms.
cases, the debtor co
ontinues to op perate as a “debtor-in-pos ssession,” alth
hough it is possible to ha a trustee
ave
appoin to assume responsibili for operati
nted e ity ions. If the co
ompany is no progressing toward a reo
ot g organization
and seettlement of its debts with a reasona
i hin able time, op perations coul cease, and the compan could be
ld d ny
forced to liquidate. Reorganizat tion generally includes sal of non-ess
y le sential assets to fund expeenses of the
case an dividends to creditors.
nd t
oximately how long will th Kodak ba
2. Appro w he ankruptcy ta ke?
Many companies tha file Chapter 11 have a sa of assets a
c at r ale arranged prior to filing. The file Chapte 11 to clear
r ey er
title to the assets, which can be difficult or im
w d mpossible for a debt-laden c company outs of bankru
side uptcy. These
are refferred to as “ppre-packaged cases.” Pre-ppackaged Chap 11 cases are often com
apter s mpleted in six months or
x
less. Kodak’s Chap 11 is no a pre-packa
K pter ot aged case. KKodak has sta ated that its reorganization is largely
depend upon the sale or licens of its intellectual propert and that it expects to em
dent se ty merge from CChapter 11 in
2013. Other compa anies, most notably Norte Networks, have succes
n el ssfully used the proceeds of sale of
s
intellecctual property to fund a div
y vidend to credditors. Some companies th have staye in Chapter 11 too long
hat ed
have be unable to cover the exp
een pense of a Cha apter 11 case, resulting in li
iquidation.
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2. IN
NFORMATION FOR SUPPLIE OF KODA
N ERS AK
3. What are the right and obliga
ts ations of Kod suppliers
dak s?
Supplie to Kodak on open acco
ers ount are not obligated to s to Kodak in the Chapter 11 case. S
sell k Suppliers on
contrac may be req
cts quired to hono their contra and contin to supply Kodak. The b
or acts nue bankruptcy fil by itself
ling
does not give a sup
n pplier the righ to cancel a contract. Th Bankruptc Code grant priority in payment to
ht he cy ts
supplie that provid goods to Kodak post-ban
ers de nkruptcy and wwithin twenty days prior to bankruptcy. While these
y o
prioriti enhance th likelihood of payment, th do not gua
ies he o hey aranty it. Kod is seeking to grant “crit
dak tical vendor”
status to certain sup
t ppliers of its choosing. Cri
c itical vendor status, if auth
horized by the Bankruptcy Court, also
e y
enhanc the chance of paymen but does no assure paym
ces es nt ot ment. Critical vendors wil be asked to grant post-
l ll o
bankruuptcy credit an other conce
nd essions to Kod in exchan for payme of their pr
dak nge ent re-bankruptcy claims. The
terms of any critical vendor agreem should be reviewed b the supplier attorney in advance.
o ment b by r’s n
4. How are ongoing contracts wit Kodak han
a c th ndled within the bankrup
ptcy proceed
ding?
Contra that are not fully perfo
acts n formed at the time of the b
bankruptcy fi iling (January 19, 2012) a generally
y are
subject to assumptio or rejection by Kodak within the bank
t on n w kruptcy case. If the contrac is assumed, Kodak will
ct ,
be requuired to cure defaults, incl luding pre-ba
ankruptcy pay
yment defaults If the contr is rejecte the other
s. ract ed,
party is entitled to file a claim for damages. Th damages c
s fi he claim is a gen neral unsecure non-priority claim. The
ed y
standar for assumpt or rejectio is prudent business judg
rd tion on gment. Thus, a contract for e essential supp
plies is likely
to be assumed, and a contract th Kodak is losing money on is likely to be rejected Kodak may also try to
a hat l y d. y
renegotiate contracts in the Chapte 11 case, usi the possib
s er ing bility of rejecti as leverag
ion ge.
5. What is the proced
dure to file cl
laims against Kodak?
t
Claims are filed on an official fo promulga
s orm ated by the BBankruptcy Ru ules. Each cla must cont
aim tain backup,
such as invoices and delivery rec
s d ceipts. The na
ature of the cla and any priority in pa
aim ayment that th creditor is
he
entitled to must be specified in th claim. All claims are fil under pen
d s he led nalty of perjur The Bankr
ry. ruptcy Court
will set a deadline fo filing claim and Kodak will be requi
t or ms, k ired to provide sufficient no
e otice of the de
eadline to all
of its creditors. Once the claim fil deadline has passed, K
c e ling h Kodak will hav an opportun to object t any claim
ve nity to
that it believes to be too high or in
b nvalid.
6. How are preferences handled in a bankrup
a ptcy case?
Payme made by Kodak or any of the filing subsidiaries w
ents K y within 90 days prior to the filing date of January 19,
f
2012 may be subject to return as preferences. There are man elements an defenses to the preferen law, so a
m T ny and o nce
credito should cons with coun before ret
or sult nsel turning any paayment. Even if a payment is a preferen and there
n t nce
is no defense, a settl
d lement can ussually be made for less than return of the entire payme Preferenc claims are
e n e ent. ce
made at the end of the bankruptcy case, so a co
a t y ooperative rel
lationship wit Kodak duri the bankru
th ing uptcy case is
no assuurance that the creditor will not be sued at the end of the case for r
f return of paymments made w within the 90
day preeference perio If a prefere
od. ence is returne the credito has a gener unsecured non-priority c
ed, or ral claim for the
amoun returned.
nt
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3. IN
NFORMATION FOR KODAK RETIREES
N K
7. Will Kodak’s bank
K kruptcy affec retiree hea benefits?
ct alth ?
Becaus Kodak has already cut back its retiree health benefi we have a
se e fits, assumed that t plan docu
the ument allows
Kodak to do so. If that is true, th bankruptcy will not aff
he y fect Kodak’s right to further cut back re
etiree health
benefit in the futu
ts ure. Obviou usly, Kodak will be unde more press
w er sure to discoontinue those benefits in
bankru
uptcy. A copy of the plan doocument shoul be requeste by any retir who is faced with this is
ld ed ree ssue.
8. How will Kodak’s bankruptcy affect retirem
w ment plans?
Kodak’s defined benefit plan (“KRIP”) is not fully fun
( nded accordin to the Pe
ng ension Benef Guaranty
fit
Corporration (“PBG GC”) web site However, most defined benefit plan are in a sim
e. d ns milar situation If Kodak
n.
cannot continue to make contribu
m utions or if the PBGC decid the plan is in trouble, P
e des s PBGC could take over the
plan. In that case, th PBGC wou only pay th benefit gua
I he uld he aranteed by law
w.
The 4001(k) plan balance (“SIP”) as of the date of bankruptc is fully pro
e cy otected. Futur employer c
re contributions
could be cut.
b
All nonn-qualified be
enefits, includi without limitation, exce benefit pla (“KERIP” and “KURIP and non-
ing ess ans ” P”)
qualifie deferred co
ed ompensation, are unfunded and subject to the claims o the general creditors of th company.
o of he
Accorddingly, the par
rticipants in th
hose plans are general unsec
cured creditor with respect to their bene
rs t efits.
Becaus of the comp
se plexity of Koddak’s qualified and non-qua
d alified retirem benefits, t informatio is general
ment this on
in natu and each participant sho seek advi with respe to their spe
ure, p ould ice ect ecific situation
n.
9.
. Does the Kodak bankruptcy affect severa
t b ance paymen and ben
nts nefits I may be receiving or might
g
receive should I be laid off in th future?
e e he
ntarily laid off employees currently rec
Involun ceive a sever
rance benefit under Kodak Severance Plan. The
k’s e
severan payments generally equ one and a half (1½) w
nce uals weeks of pay f every year of service. P
for r Provided the
Severa
ance Plan is co
overed under Kodak’s ERIS Pension Pl these paym
K SA lan, ments are gen
nerally protect
ted.
Howev going forw Kodak could elect to modify its Sev
ver, ward c m verance Plan. Therefore, a
. although unde the current
er
plan Kodak employe who are in
K ees erminated are eligible for a severance be
nvoluntarily te enefit, there is no guaranty
that ben will cont
nefit tinue in the fu
uture.
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4. IN
NFORMATION FOR CURREN KODAK EMPLOYEES
N NT
0.
10 What affect could the Kodak bankruptcy have upon cu
b h urrent Kodak employees?
k ?
Curren employees will continue to receive the wages and benefits durin their emplo
nt w t eir ng oyment tenure However,
e.
irrespective of the ba
ankruptcy, Ko
odak as an em
mployer-at-will has the prer
l, rogative to cha
ange employe wages and
ee
benefit prospectivel
ts ly.
Some employees ha asked whe
e ave ether they shoould terminate their emplo
e oyment at Koddak. General speaking,
lly
we wo ould not recom
mmend that coourse of actio Voluntari termination of your emp
on. ily n mployment would result in
your im
mmediate loss of wages and benefits, ineligibility for u
s d unemploymen insurance be
nt enefits and the loss of any
e
potenti Kodak sev
ial verance benefi
fits. The old adage, “It is e
a easier to find a job when y have a jo is also a
you ob,”
consideeration.
1.
11 What action should I take as a result of the Kodak bank
d e kruptcy?
Stay in
nformed. Ban nkruptcy proceeedings can be a long and fr
e frustrating process. Many o the consequ
of uences of the
Kodak bankruptcy will be outside of your cont
w e trol. However if you are re
r, equired to ma decisions which could
ake
affect your rights in the Bankruptc proceeding you may wa to obtain le counsel t assist you.
y cy g, ant egal to
Take control of thos matters und your contro You may want to be pr
se der ol. roactive by meeting with yo financial
our
advisor to evaluate your personal financial situ
r l uation and pl
lan. You sho ould also conssider updating your estate
g
plan to make sure th it meets yo current ne
o hat our eeds and objec
ctives (i.e. Wi Trusts, Po
ills, owers of Attorrney, Living
Wills and Health Ca Proxies, estate tax plan
a are nning, protecti of assets f
ion from potential long term nu
l ursing home
costs, etc.).
e
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