Kodak, ex-stockholders in court

Matthew Daneman

Staff writer

Some Eastman Kodak Co. shareholders who want compensation for losing their stock are heading to federal bank­ruptcy court this week, fighting a company objec­tion to their claims.

U.S. Bankruptcy Judge Allan Gropper is sched­uled to hear arguments Thursday from various shareholders who have filed a claim against Ko­dak and now are objecting to the company’s efforts to get those claims de­clared null and void.

Throughout its bank­ruptcy and since exiting Chapter 11 in September, Kodak has regularly filed objections in U.S. Bank­ruptcy Court, essentially saying it doesn’t owe any­thing to this particular party seeking money, and here’s why. The deadline for the last of those claims was Oct. 18. In November and December, Kodak filed a series of objections to claims with lists of hun­dreds of former share­holders who had filed claims asking to be com­pensated for their lost

stock. Some of those share­holders are objecting to Kodak’s objections. “The court would not have allowed them to emerge from bankruptcy if they had no assets,” Ko­dak shareholder James M Brennan of Micanopy, Fla., wrote the court in December. “All I want is my percentage share of the sale price of the assets of Eastman Kodak Co.”

“I am a schoolteacher who had faith in Kodak and I would like my claim to be allowed for financial retirement savings,” Ma­ry S. Servey of Riverview, Mich., hand wrote in her objection in December.

“When management canceled the stock, I did not get reimbursed or re­funded my investment money,” wrote Valentin Ortega of Sanger, Calif., who has a roughly $284,000 claim against the company. “I did not even get the right to vote or any kind of notice … that the original stock was going to cancel. Management is not satisfied with over­coming all the obstacles during restructuring and living the job of their re­cent successes. They also want to cut me out and other creditors or inves­tors and not pay us our capital investment that we have invested in the company.”

And Tommy Robinson Sr. of Cumberland, Md., wrote that he bought 2,000 shares over the past dec­ade. “Eastman Kodak is not broke and still do own a great majority of prop­erty, land and buildings that have value so to deny (the claim for $17,169) would be a travesty of jus­tice.”

However, those argu­ments likely will not carry any water legally. U.S. bankruptcy law holds that when a bankrupt compa­ny is repaying its various creditors, shareholders are last in line. Only after everyone else, such as suppliers, is made whole do the actual owners get anything. In Kodak’s case, the various unsecured credi­tors, such as suppliers, are far from being made whole. Most of its unse­cured creditors were paid 4 to 5 cents on the dollar for their IOUs, and many of them bought new shares in the com­pany in a rights offering. The new stock is up 77 percent since it began trading in September and closed Wednesday at $32.99 a share.

In a letter dated Jan. 10 to former sharehold­ers who had filed a claim, Kodak legal coun­sel Young Conaway Star­gatt & Taylor wrote that while “We … are certain­ly sympathetic to your situation,” it reiterated what the court approved on Aug. 23 — a reorgani­zation plan for getting out of bankruptcy that explicitly says no share­holders will get any com­pensation.

The hearing on Ko­dak’s objections to the shareholder claims, and the shareholder objec­tions to the objection, is scheduled for 11 a.m. in Gropper’s Manhattan courtroom.

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