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Shareholders hoping to squeeze cash from Kodak are deluded, says court

What about bust camera firm's staffers, suppliers? Investors told to jog on by beak

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Kodak shareholders aren't going to get the chance to set up a committee to represent their interests in the reorganisation of the bankrupt firm.

Investors in the bust camera firm were trying to get a US bankruptcy judge to allow them to set up the committee, after hearing of the current reorganisation plan, which would see them lose their investments.

Judge Allan Gropper said that there was no evidence that there was any money left in the company for investors.

"The shareholders who have commenced or have joined in the current motion are apparently convinced that it cannot be possible that the company in which they invested has fallen so far that there is so little value for unsecured creditors and no value at all for shareholders," he said in his ruling.

"As will be seen hereafter, however, the hearing produced no evidence of a value higher than the Debtors have projected or of any likelihood that such value exists."

Gropper said that this factor, along with the cost of setting up the committee and the fact that existing representatives were already "adequate", were all reasons to deny the shareholder motion.

"The Court recognises that if Kodak’s current plan is confirmed, its shareholders will lose their entire investment. However, its creditors, who include employees who may have lost their jobs, retirees who worked for Kodak for their entire careers, and small suppliers who may have been dependent on Kodak for their business, will also suffer great losses," he said.

"These creditors did not take an investment risk when they contracted with Kodak, and under the Bankruptcy Code they are entitled to recover before the shareholders."

Meanwhile, Kodak said in a filing that all classes of eligible creditors had voted in favour of its plan to exit bankruptcy, which will see it focus on commercial imaging after selling off its digital imaging patent portfolio for $527m and its personalised and document imaging businesses for $650m.

Under the plan, unsecured creditors are likely to only get 4 or 5 cents for every dollar they lent the firm before its high pension costs and loss of market share after being slow to move into digital cameras forced it into Chapter 11 protection in January last year.

The company is hoping to emerge as the new commercial business in September. ®

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