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Note 2 - Bankruptcy Proceedings
 6 Months Ended
Jun. 30, 2013
Reorganizations [Abstract]  
Reorganization under Chapter 11 of US Bankruptcy Code Disclosure [Text Block]

NOTE 2:  BANKRUPTCY PROCEEDINGS


The Bankruptcy Filing was intended to permit Kodak to reorganize and bolster liquidity, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and focus on its most valuable business lines.  The Debtors’ goal is to implement a plan of reorganization that meets the standards for confirmation under the Bankruptcy Code.  Confirmation of a plan of reorganization could materially alter the classifications and amounts reported in Kodak’s consolidated financial statements, which do not give effect to any adjustments to the carrying values of assets or amounts of liabilities that might be necessary as a consequence of a confirmation of a plan of reorganization or other arrangement or the effect of any operational changes that may be implemented.


OPERATION AND IMPLICATIONS OF THE BANKRUPTCY FILING


Under Section 362 of the Bankruptcy Code, the filing of voluntary bankruptcy petitions by the Debtors automatically stayed most actions against the Debtors, including most actions to collect indebtedness incurred prior to the Petition Date or to exercise control over Kodak’s property.  Accordingly, although the Bankruptcy Filing triggered defaults for certain of the Debtors’ debt obligations, creditors are stayed from taking any actions as a result of such defaults.  Absent an order of the Bankruptcy Court, substantially all of the Debtors’ pre-petition liabilities are subject to compromise under a plan of reorganization.  As a result of the Bankruptcy Filing, the realization of assets and the satisfaction of liabilities are subject to uncertainty.  The Debtors, operating as debtors-in-possession under the Bankruptcy Code, may, subject to approval of the Bankruptcy Court, or as otherwise permitted in the ordinary course of business (and subject to restrictions contained in the debtor-in-possession credit agreements and the Backstop Commitment Agreement), sell or otherwise dispose of assets and liquidate or compromise liabilities for amounts other than those reflected in the consolidated financial statements.  Further, a confirmed plan of reorganization or other arrangement may materially change the amounts and classifications in the Company’s consolidated financial statements.


The Debtors may assume, assume and assign, or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions.  In general, rejection of an executory contract or unexpired lease is treated as a pre-petition breach of the executory contract or unexpired lease in question and, subject to certain exceptions, relieves the Debtors from performing their future obligations under such executory contract or unexpired lease but entitles the contract counter-party or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach.  Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure any existing defaults under such executory contract or unexpired lease.


Subsequent to the Petition Date, the Debtors received approval, but not direction, from the Bankruptcy Court to pay or otherwise honor certain pre-petition obligations generally designed to stabilize Kodak’s operations.  These obligations related to certain employee wages, salaries and benefits, certain customer program obligations, and the payment of vendors and other providers in the ordinary course for goods and services received after the Petition Date.  The Debtors have retained, pursuant to Bankruptcy Court approval, legal and financial professionals to advise the Company in connection with the Bankruptcy Filing and certain other professionals to provide services and advice in the ordinary course of business.  From time to time, the Debtors may seek Bankruptcy Court approval to retain additional professionals.


The U.S. Trustee for the Southern District of New York (the “U.S. Trustee”) has appointed an official committee of unsecured creditors (the “UCC”) as well as an official committee of retired employees (“Retiree Committee”).  The UCC, the Retiree Committee and their legal representatives have a right to be heard on all matters affecting the Debtors that come before the Bankruptcy Court.  There can be no assurance that the UCC will support the Debtors’ positions on matters to be presented to the Bankruptcy Court in the future or on the plan of reorganization.


PLAN OF REORGANIZATION


In order for the Debtors to emerge successfully from chapter 11, the Debtors must obtain the Bankruptcy Court’s approval of the plan of reorganization, which will enable the Debtors to emerge from chapter 11 as a reorganized entity operating in the ordinary course of business outside of bankruptcy.  A plan of reorganization determines the rights and satisfaction of claims of various creditors and security holders, and is subject to the ultimate outcome of negotiations, events and Bankruptcy Court decisions.


Under section 1125 of the Bankruptcy Code, a disclosure statement must be approved by the Bankruptcy Court before the Debtors may solicit acceptance of a proposed plan of reorganization.  To be approved by the Bankruptcy Court, the disclosure statement must contain “adequate information” that would enable a hypothetical investor to make an informed judgment about the plan.  Once the disclosure statement is approved, the Debtors may send the proposed plan of reorganization, the disclosure statement and ballots to all creditors entitled to vote.  On June 26, 2013, the Bankruptcy Court approved the Debtors’ amended disclosure statement and procedures to enable creditors to vote on the Debtors’ amended joint plan of reorganization (“POR”).  On July 5, 2013, the Debtors commenced solicitation of votes on the POR.


The POR organizes the Debtors’ creditor and equity constituencies into groups called classes. For each class, the POR describes (a) the underlying claim or equity interest, (b) the recovery available to the holders of claims or equity interests in that class under the plan, (c) whether the class is impaired under the plan, meaning that each holder will receive less than full value on account of its claim or equity interest or that the rights of each holder under law will be altered in some way (such as receiving stock instead of holding a claim) and (d) the form of consideration (e.g., cash, stock or a combination thereof), if any, that such holders will receive on account of their respective claims or equity interests under the POR.  There can be no assurance that the Debtors will be able to secure approval for the POR from creditors or confirmation from the Bankruptcy Court.  In the event the Debtors do not secure approval or confirmation of the POR, any outstanding debtor-in-possession credit agreement principal and interest could become immediately due and payable.


The POR provides for, among other things, the following on the emergence date:


Cancellation of the obligations of the Debtors under the Second Lien Notes indentures, unsecured notes indentures, equity interests, or any other instrument evidencing or creating any indebtedness or obligation of, or ownership interest in, the Debtors or giving rise to any claim or equity interest except as otherwise specifically provided for in the POR;


 

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The authorization of 500 million shares of common stock under a reorganized certificate of incorporation;


 

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The issuance of 40 million shares of common stock, inclusive of shares to be distributed as a part of the Rights Offerings, for distribution to the unsecured creditors and/or Backstop Parties, plus to the extent applicable, the number of shares of common stock necessary to satisfy payment of the backstop commitment fees and the Retiree Committee administrative claim (“Effective Date Share Issuance”); 


 

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The issuance to the holders of general unsecured and Retiree Committee unsecured claims net-share settled warrants to purchase: (i) at a $14.93 exercise price, a number of shares of common stock equal to 5% of the Effective Date Share Issuance (the “125% Warrants”) and (ii) at a $16.12 exercise price a number of shares of common stock equal to 5% of the Effective Date Share Issuance (the “135% Warrants”);


 

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Establishment of a liquidating trust (the “Kodak GUC Trust”) and distribution of the beneficial interests therein to the holders of allowed general unsecured claims and the Retiree Committee unsecured claim, whether their claims are allowed on or after the emergence date; and


 

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If the class of holders of Second Lien Notes votes to accept the POR, the settlement of the allowed amount of the Second Lien claims.


The following conditions, and others, shall have been satisfied or waived for the POR to be effective:


 

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The POR shall have been confirmed by the Bankruptcy Court; 


 

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The Backstop Commitment Agreement shall be in full force and effect, and the transactions contemplated thereunder shall have been consummated and there shall not be a stay or injunction in effect with respect thereto; 


 

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The closing of the Emergence Credit Facilities, as defined below, shall have occurred; and


 

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The KPP Global Settlement, as defined below, shall have been consummated.


There is a hearing to consider confirmation of the POR scheduled with the Bankruptcy Court on August 20, 2013.


Backstop Commitment Agreement and Rights Offering


On June 26, 2013, the Bankruptcy Court approved a backstop commitment agreement with GSO Capital Partners LP, on behalf of various managed funds, BlueMountain Capital Management, LLC, on behalf of various managed funds, George Karfunkel, United Equities Commodities Company, Momar Corporation and Contrarian Capital Management, LLC, on behalf of Contrarian Funds, LLC (collectively, the “Backstop Parties”), pursuant to which the Backstop Parties, which are creditors of the Debtors, will provide a $406 million commitment to backstop two proposed rights offerings (the “Rights Offerings”) to be conducted in connection with the POR of the Debtors (the “Backstop Commitment Agreement”).


In accordance with the POR, the Backstop Commitment Agreement, and the procedures for the conduct of the Rights Offerings (the “Rights Offerings Procedures”), the Company will offer eligible creditors, including the Backstop Parties, up to 34 million shares of common stock for the per share purchase price of $11.94, or an aggregate purchase price of approximately $406 million (the “Rights Offerings Amount”).  In addition to their right to participate in the Rights Offerings in their capacities as creditors of the Company, the Backstop Parties will be entitled to purchase an additional 10 million shares of common stock at a purchase price of $11.94 per share in the Rights Offerings.  Pursuant to the Backstop Commitment Agreement, the Backstop Parties have agreed to purchase all shares of common stock that are not duly subscribed for pursuant to the Rights Offerings.


Under the Backstop Commitment Agreement, the Company has agreed to pay the Backstop Parties, on the effective date of the POR, a commitment fee and a consummation fee equal to 4.0% and 1.0% of the Rights Offerings Amount, respectively.  The commitment fee and the consummation fee will be payable, at the Company’s election, in cash, common stock or a combination of cash and common stock.  The Company will also be required to pay the commitment fee in cash upon the occurrence of certain termination events as set forth in the Backstop Commitment Agreement.  The Backstop Parties’ commitments to backstop the Rights Offerings, and the other transactions contemplated by the Backstop Commitment Agreement, are conditioned upon the satisfaction of all conditions to the effectiveness of the POR, and other applicable conditions precedent set forth in the Backstop Commitment Agreement.  The issuance of common stock pursuant to the Rights Offerings and the Backstop Commitment Agreement is conditioned upon, among other things, confirmation of the POR by the Bankruptcy Court, and will occur upon the Company’s emergence from chapter 11.


Emergence Credit Facilities


On June 26, 2013, the Bankruptcy Court approved Kodak’s entry into commitment and engagement documents in connection with a new exit financing package (the “Emergence Credit Facility”).  The Emergence Credit Facility provides for senior secured term loans of $695 million consisting of $420 million of first lien term loans and $275 million of second lien term loans (the “Term Loans”).  In addition, the Emergence Credit Facility provides for a senior secured asset-based revolving credit facility (the “ABL Credit Facility”) of up to $200 million, subject to the satisfaction of certain conditions.  The ABL Credit Facility would have a maturity of the earlier of five years or 90 days prior to maturity of term loans or other material indebtedness.  The first-lien term loans would have a maturity of six years from the closing date and the second-lien term loans would have a maturity of seven years from the closing date.


Refer to Note 9, “Short-Term Borrowings and Long-Term Debt”.


KPP Global Settlement


Eastman Kodak Company had previously issued (pre-petition) a guarantee to Kodak Limited (the “Subsidiary”) and KPP Trustees Limited (the “Trustee”) of the Kodak Pension Plan in the United Kingdom (the “KPP”).  Under that arrangement, EKC guaranteed to the Subsidiary and the Trustee the ability of the Subsidiary, only to the extent it becomes necessary to do so, to (1) make contributions to the KPP to ensure sufficient assets exist to make plan benefit payments, as they become due, if the KPP otherwise would not have sufficient assets and (2) make contributions to the KPP such that it will achieve fully funded status by the funding valuation for the period ending December 31, 2022.


The Subsidiary agreed to make certain contributions to the KPP as determined by a funding plan agreed to by the Trustee.  Under the terms of this agreement, the Subsidiary is obligated to pay a minimum amount of $50 million to the KPP in each of the years 2011 through 2014, and a minimum amount of $90 million to the KPP in each of the years 2015 through 2022.  The Subsidiary has not paid the annual contributions due for 2012 or 2013 and payment of these amounts could have been demanded at any time.  Future funding beyond 2022 would be required if the KPP is still not fully funded as determined by the funding valuation for the period ending December 31, 2022.  These payment amounts for the years 2015 through 2022 could be lower, and the payment amounts for all years noted could be higher by up to $5 million each year, based on the exchange rate between the U.S. dollar and British pound.  These minimum amounts do not include potential contributions related to tax benefits received by the Subsidiary.


The underfunded position of the KPP of approximately $1.4 billion and $1.5 billion (calculated in accordance with U.S. GAAP) is included in Liabilities held for sale presented in the Consolidated Statement of Financial Position as of June 30, 2013 and December 31, 2012, respectively.  The underfunded obligation relates to a non-debtor entity.  However, the Trustee has asserted an unsecured claim of approximately $2.8 billion under the guarantee.  The Subsidiary has also asserted an unsecured claim under the guarantee for an unliquidated amount.


On April 26, 2013, Eastman Kodak Company, the Trustee, Kodak Limited and certain other Kodak entities entered into a global settlement agreement that resolves all liabilities of the Kodak group with respect to the KPP (the “Global Settlement”).  The Global Settlement involves the following key elements:


 

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The Subsidiary will make a cash payment of at least $120 million which will be applied to reduce Kodak Limited’s pension liabilities to the KPP (the “KL Payments”);


 

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The extinguishment of the Subsidiary’s remaining obligations to the KPP in connection with a “regulated apportionment arrangement” (the “RAA”) under English law;


 

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The acquisition by the KPP of certain assets, and the assumption by the KPP of certain liabilities, of Kodak’s Personalized Imaging and Document Imaging businesses with at least $445 million settled in cash (the “KPP Purchase”) of which no more than $325 million will come from KPP assets, net of the KL Payments, and up to $35 million of which is subject to repayment to KPP if the businesses do not achieve certain adjusted EBITDA targets through December 31, 2018;


 

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The approval by the Pension Regulator of the United Kingdom (the “Regulator”) of a clearance application filed by Kodak and its affiliates stating that, after giving effect to the Global Settlement, it would be unreasonable for the Regulator to issue to any of the applicants a “financial support direction” or “contribution notice” with respect to any remaining funding shortfall that may affect the KPP.Such approval was granted by the Regulator on April 26, 2013; and


 

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A release by Kodak, the Trustee, Kodak Limited and other applicable entities with respect to all other liabilities relating to the KPP.


Each of these primary elements of the Global Settlement will be simultaneously effective upon consummation of the KPP Purchase.  Conditions to the KPP Purchase include, among others: (i) Bankruptcy Court approval (obtained on June 20, 2013), (ii) the absence of a “Material Adverse Effect” as defined in the documentation for the KPP Purchase (unless waived by the Trustee), (iii) substantial consummation of Kodak’s plan of reorganization or the provision by Eastman Kodak Company of adequate assurances of performance under the Agreement in a form reasonably acceptable to the Trustee (unless waived by the  Trustee), (iv) customary conditions precedent for negotiated purchases of going concern businesses by arm’s-length parties and (v) the approval of the RAA by the Regulator.  On May 28, 2013, the Regulator issued its approval of the RAA and the Pension Protection Fund issued its final notice of no objection to the RAA.


The consummation of the Global Settlement is contingent upon the substantial consummation of the Debtors’ POR, or the provision by Kodak of adequate assurances of performance under the Agreement in a form reasonably acceptable to the Trustee.


DEBTOR-IN-POSSESSION CREDIT FACILITIES


Senior Debtor-in-Possession Credit Facility


In connection with the Bankruptcy Filing, on January 20, 2012, the Company and Kodak Canada Inc. (the “Canadian Borrower” and, together with the Company, the “Borrowers”) entered into a Debtor-in-Possession Credit Agreement, as amended on January 25, 2012, March 5, 2012, April 26, 2012, December 19, 2012, and February 6, 2013 (the “Original Senior DIP Credit Agreement”).  Pursuant to the terms of the Original Senior DIP Credit Agreement, the lenders agreed to lend to the Borrowers an aggregate principal amount of up to $950 million, consisting of up to $250 million super-priority senior secured asset-based revolving credit facilities and an up to $700 million super-priority senior secured term loan facility (collectively, the “Loans”).  On March 22, 2013, the Original Senior DIP Credit Agreement was amended and restated pursuant to an Amendment Agreement dated as of March 13, 2013 (the “Amended and Restated Senior DIP Credit Agreement”).  The Amended and Restated Senior DIP Credit Agreement terminates and all outstanding obligations must be repaid on the earliest to occur of (i) September 30, 2013, (ii) the date of the substantial consummation of certain reorganization plans, or (iii) certain other events, including Events of Default (as defined in the Amended and Restated Senior DIP Credit Agreement) and repayment in full of the obligations pursuant to a mandatory prepayment.


Junior Debtor-in-Possession Credit Facility


On March 22, 2013, the Company entered into a Debtor-in-Possession Loan Agreement (the “Junior DIP Credit Agreement”) with an aggregate principal amount of $848 million of term loans.  The term loans consist of first lien term loans in the aggregate principal amount of $473 million (the “New Money Loans”) and junior lien term loans in the aggregate principal amount of $375 million consisting of a dollar-for-dollar “roll-up” (such loans, the “Rolled-Up Loans”)  for a portion of the amounts then outstanding under the Company’s 2019 Senior Secured Notes issued March 15, 2011 and 2018 Senior Secured Notes issued March 5, 2010 (the “Second Lien Notes”).  The Bankruptcy Filing created an event of default under the Second Lien Notes.  Upon entering into the Junior DIP Credit Agreement, the Company repaid, in full, the term loan outstanding under the Amended and Restated Senior DIP Credit Agreement.


The Junior DIP Credit Agreement also contains provisions allowing for a conversion of up to $654 million of the Junior DIP Credit Agreement loans upon emergence from chapter 11 into permanent exit financing with a five year term, provided that Kodak meets certain conditions and milestones, including Bankruptcy Court approval of a plan of reorganization by September 15, 2013 with an effective date of no later than September 30, 2013; repayment of at least $200 million of principal amount of New Money Loans; the resolution of all obligations owing in respect of the Kodak Pension Plan of the United Kingdom on terms reasonably satisfactory to the “Required Lead Lenders” (as defined in the Junior DIP Credit Agreement); there shall have been an additional prepayment of loans in an amount equal to 75% of U.S. Liquidity (as defined in the Junior DIP Credit Agreement) above $200 million; and receiving at least $600 million in cash proceeds through the disposition of certain specified assets that are not part of the commercial imaging business, including any combination of the Document Imaging and Personalized Imaging businesses and trademarks and related rights provided that consent of the Required Lead Lenders would be necessary to exclude the assets of the Document Imaging and Personalized Imaging businesses from the disposition.


Refer to Note 9, “Short-Term Borrowings and Long-Term Debt”.


PRE-PETITION CLAIMS


On April 18, 2012, as amended on May 16, 2012 and February 1, 2013, the Debtors filed schedules of assets and liabilities and statements of financial affairs with the Bankruptcy Court.  On May 10, 2012, the Bankruptcy Court entered an order establishing July 17, 2012 as the bar date for potential creditors to file proofs of claims and established the required procedures with respect to filing such claims.  A bar date is the date by which pre-petition claims against the Debtors must be filed if the claimants wish to receive any distribution in the chapter 11 proceedings.


As of July 25, 2013 the Debtors have received approximately 6,200 proofs of claim, a portion of which assert, in part or in whole, un-liquidated claims.  In the aggregate, total liquidated proofs of claim of approximately $22.5 billion have been filed against the Debtors.  New and amended claims may be filed in the future, including claims amended to assign values to claims originally filed with no designated value.  The Debtors are continuing to reconcile such claims to the amounts listed by the Debtors in their schedule of assets and liabilities (as amended).  Differences in liability amounts estimated by the Debtors and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court, where appropriate.  Approximately 1,700 claims totaling approximately $1.2 billion have been expunged or withdrawn and the Debtors have filed additional claim objections with the Bankruptcy Court for approximately 100 claims totaling approximately $90 million in additional reductions.  The Debtors may continue to ask the Bankruptcy Court to disallow claims that the Debtors believe are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons.  In addition, as a result of this process, the Debtors may identify additional liabilities that will need to be recorded or reclassified to Liabilities subject to compromise.  In light of the substantial number of claims filed, the claims resolution process may continue to take considerable time to complete. The resolution of such claims could result in material adjustments to Kodak’s financial statements. The determination of how liabilities will ultimately be treated cannot be made until the Bankruptcy Court approves a plan of reorganization.  Accordingly, the ultimate amount or treatment of such liabilities is not determinable at this time.


Distribution of property pursuant to the POR would be made on an initial distribution date for each claim that is allowed on or prior to emergence from chapter 11.  If the class of holders of Second Lien Notes votes to accept the POR, and the POR is confirmed, such holders would receive distributions on the emergence date.  Reorganized Kodak would, in consultation with the Kodak GUC Trustee identify periodic dates for subsequent distributions.  Distributions for claims that are allowed after emergence from chapter 11 would be made on the first subsequent distribution date after such claims are allowed.  Excess property, initially reserved for disputed claims, would be distributed to holders of allowed general unsecured claims on a pro rata basis.


FINANCIAL REPORTING IN REORGANIZATION


Expenses, gains and losses directly associated with reorganization proceedings are reported as Reorganization items, net in the accompanying Consolidated Statement of Operations.  In addition, Liabilities subject to compromise in the chapter 11 proceedings are distinguished from liabilities of Non-Filing Entities, fully-secured liabilities not expected to be compromised and from post-petition liabilities in the accompanying Consolidated Statement of Financial Position as of June 30, 2013 and December 31, 2012.  Where there is uncertainty about whether a secured claim will be paid or impaired under the chapter 11 proceedings, Kodak has classified the entire amount of the claim as a liability subject to compromise.  The amount of liabilities subject to compromise represents Kodak’s estimate, where an estimate is determinable, of known or potential pre-petition claims to be addressed in connection with the bankruptcy proceedings.  Such liabilities are reported at Kodak’s current estimate, where an estimate is determinable, of the allowed claim amounts, even though the claims may be settled for lesser amounts.  These claims remain subject to future adjustments, which may result from: negotiations; actions of the Bankruptcy Court; disputed claims; rejection of contracts and unexpired leases; the determination as to the value of any collateral securing claims; proofs of claims; or other events.


Effective as of January 19, 2012, Kodak ceased recording interest expense on outstanding pre-petition debt classified as Liabilities subject to compromise.  Contractual interest expense represents amounts due under the contractual terms of outstanding debt, including debt subject to compromise.  Contractual interest expense related to Liabilities subject to compromise of approximately $24 million and $22 million for the periods from January 1, 2013 through June 30, 2013 and January 19, 2012 through June 30, 2012, respectively, has not been recorded, as it is not expected to be an allowed claim under the chapter 11 case.


SECTION 363 ASSET SALES


On February 1, 2013, Kodak entered into a series of agreements related to the monetization of certain of its intellectual property assets, including the sale of its digital imaging patents.  Under these agreements, Kodak received approximately $530 million, a portion of which was paid by twelve licensees that received a license to the digital imaging patent portfolio and other patents owned by Kodak. Another portion was paid by Intellectual Ventures Fund 83 LLC (“Intellectual Ventures”) and Apple, Inc., each of which acquired a portion of the digital imaging patent portfolio, subject to the licenses granted to the twelve new licensees, and previously existing licenses.  In addition, Kodak retained a license to the digital imaging patents for its own use.  In connection with this transaction, the Company entered into a separate agreement with FUJIFILM Corporation (“Fuji”) whereby, among other things, Fuji granted Kodak the right to sub-license certain Fuji Patents to businesses Kodak intends to sell as part of the Company’s emergence efforts.  The Debtors also agreed to allow Fuji a general unsecured pre-petition claim against the Debtors in the amount of $70 million.


EASTMAN BUSINESS PARK SETTLEMENT AGREEMENT


On June 17, 2013 the Company, the New York State Department of Environmental Conservation and the New York State Urban Development Corporation, d/b/a Empire State Development entered into an agreement which, in part, establishes a $49 million environmental trust for Eastman Business Park (the “EBP Settlement Agreement”). The agreement was subsequently amended on August 6, 2013 (the “Amended and Restated EBP Settlement Agreement”).


The Amended and Restated EBP Settlement Agreement includes a settlement of Kodak’s historical environmental liabilities at Eastman Business Park (“EBP”) through the establishment of an environmental remediation trust (the “EBP Trust”).  If the Amended and Restated EBP Settlement Agreement is approved by the Bankruptcy Court, and upon the satisfaction or waiver of certain conditions, (i) the EBP Trust will be responsible for investigation and remediation at EBP arising from Kodak’s historical environmental liabilities in existence prior to the effective date of the EBP Settlement, (ii) Kodak will fund the EBP Trust with a $49 million payment and transfer to the EBP Trust Kodak’s interests in personal property, equipment and fixtures used for performing any environmental response actions at EBP, and (iii) in the event the historical liabilities exceed $99 million, Kodak will become liable for 50% of the portion above $99 million.


The transaction is subject to the approval of the Bankruptcy Court, and resolution of issues raised by the United States Department of Justice on behalf of the U.S. Environmental Protection Agency, as well as satisfaction of the other conditions precedent to effectiveness set forth in the Amended and Restated EBP Settlement Agreement.


RETIREES’ SETTLEMENT


The Debtors’ estimated allowed claims for pre-petition obligations for the Kodak Excess Retirement Income Plan (the “KERIP”), the Kodak Unfunded Retirement Income Plan (the “KURIP”), the Kodak Company Global Pension Plan for International Employees, and individual letter agreements with certain current and former employees that provided for supplemental non-qualified pension benefits are reported as Liabilities subject to compromise in the accompanying Consolidated Statement of Financial Position.


On April 30, 2013, EKRA Ltd. and certain holders of KERIP/KURIP Claims (together with the Debtors, the “Settlement Parties”) filed a motion (the “Motion”) requesting that the Bankruptcy Court appoint a committee pursuant to section 1102(a)(2) of the Bankruptcy Code, to represent the interests of the holders of the KERIP/KURIP Claims, and asserting that they and certain other holders of the KERIP/KURIP claims disagree with the underlying discount rates and mortality tables used by the Debtors to calculate the KERIP/KURIP Claims.  Subsequent to the filing of the Motion, the Settlement Parties entered into a stipulation (the “Stipulation”) approved by an order of the Bankruptcy Court, which became effective on July 18, 2013, for a total allowed claim of $244 million.  During the three months ended June 30, 2013 a provision for expected allowed claims of approximately $27 million was reflected in Reorganization Items, net in the accompanying Consolidated Statement of Operations related to what was ultimately agreed to in the Stipulation.