by Aviva Gat | Published November 2, 2012 at 2:09 PM
Eastman Kodak Co.'s official committee of unsecured creditors wants to pursue and possibly settle claims against the one-time photography giant's second-lien noteholders to avoid their security interest in some of Kodak's assets.
Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan is set to consider the committee's request on Nov. 14.
The committee's motion, filed Wednesday, Oct. 31, seeks to avoid the second-lien lenders' security interest in certain collateral including numerous patents issued by both foreign and domestic governments and several bank accounts. The committee said Kodak has waived its rights to pursue the claims, and the avoidance of the claims would benefit Kodak's estate.
Kodak has $750 million outstanding in second-lien secured notes, consisting of $500 million in 9.75% senior secured notes due 2018 and $250 million in 10.625% senior secured notes due 2019. Bank of New York Mellon NA is the indenture trustee.
On Nov. 14, meanwhile, Gropper also is scheduled to consider settlement between Kodak and ATLC Ltd. The agreement, filed Oct. 24, resolves ATLC's purported $58.6 million secured claim and allows ATLC a $40.5 million unsecured claim. ATLC had represented Kodak in certain licensing negotiations for Kodak's digital imaging patents from July 30, 1998, to May 2006. ATLC received a percentage of net proceeds from the negotiations for its services, according to the settlement.
Kodak also seeks to terminate its retiree benefits. Gropper was scheduled to consider the motion on Monday, but he rescheduled the hearing for Nov. 5 due to Hurricane Sandy. The Manhattan court has been closed since the storm hit.
Under an agreement, announced Oct. 10, Kodak would stop providing medical, dental, life insurance and survivor income benefits on Dec. 31 to its 56,000 retirees. Kodak would provide its official committee of retirees with $7.5 million in cash to support initial administration and benefit obligations. The retirees would also be allowed a $635 million unsecured claim and a $15 million administrative claim in Kodak's bankruptcy case. The committee would be able to use these funds to subsidize future benefit costs, according to a Kodak statement.
As of Dec. 31, Kodak owed $1.2 billion for its retirees' benefits. Kodak also pays about $10 million per month for their benefits. The company has been making those payments throughout the bankruptcy case, resulting in $90 million in expenditures.
Founded in 1880 by George Eastman, Kodak was once the world's leading producer of film and cameras. Since it filed for bankruptcy on Jan. 19, the Rochester, N.Y., company has been seeking to reposition its business to focus on commercial, packaging and functional printing solutions and enterprise services.
Andrew G. Dietderich, John J. Jerome, Michael H. Torkin and Mark U. Schneiderman at Sullivan & Cromwell LLP and Pauline K. Morgan and Joseph M. Barry at Young Conaway Stargatt & Taylor LLP are debtor counsel. Lonie A. Hassel and Edward J. Meehan of Groom Law Group Chtd. are Kodak's special counsel relating to the retiree negotiations. James A. Mesterharm of AlixPartners LLP is Kodak's chief restructuring officer. David Descoteaux of Lazard is the company's investment banker.
Dennis F. Dunne, Tyson M. Lomazow and Stacey J. Rappaport of Milbank, Tweed, Hadley & McCloy LLP represent the creditors' committee. Andrew I. Silfen, Beth M. Brownstein, Carol Connor Cohen and Caroline Turner English of Arent Fox LLP and R. Scott Williams and Jennifer B. Kimble of Haskell Slaughter Young & Rediker LLC represent the retiree committee. Jorian C. Rose of Baker & Hostetler LLP is counsel to ATLC. Share: blog comments powered by Disqus
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