Kodak wins approval of settlement with official committee of retirees

By Caroline Salls

Pittsburgh, Nov. 7 - Eastman Kodak Co. obtained court approval of an agreement with its official committee of retired employees that the company calls a "crucial step" toward its emergence from bankruptcy, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The agreement resolves issues regarding the retirees' medical, dental, life insurance and survivor income benefits, which the company says it could no longer pay.

The company said it has been paying the $10 million per month cost of the benefits for 56,000 retirees, spouses and other beneficiaries but cannot continue.

Under the agreement, the Kodak debtors are projected to save about $10 million a month by the end of the first quarter of 2013.

Assuming a June 2013 emergence from bankruptcy, the company said its savings will total about $100 million for 2013 after funding an initial $7.5 million of start-up capital and stipulating a $15 million allowed administrative expense claim to be paid under a confirmed plan.

Terms of agreement

Under the agreement

• Kodak will continue all retiree welfare benefits through Dec. 31;

• On the termination date, eligible retirees will be entitled to exercise any conversion rights provided by their plan;

• Retirees who lose medical coverage as a result of the termination of benefits may continue coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA) at their own cost;

• The retirees committee may establish a tax-exempt voluntary employees' beneficiary association trust or other fund, using an initial cash payment of $7.5 million from Kodak to support administration and benefits obligations;

• The committee will file a single proof of claim against the Kodak estates, which the debtors will allow as a non-priority general unsecured claim of $635 million;

• The committee will receive an allowed administrative claim of $15 million;

• The committee will dismiss its adversary proceeding; and

• The committee and the voluntary employees' beneficiary association will support a plan of reorganization.

Kodak is a Rochester, N.Y.-based imaging technology products and services provider to the photographic and graphic communications markets. The company filed for bankruptcy on Jan. 19, 2012. Its Chapter 11 case number is 12-10202.

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