By Jacqueline Palank
Eastman Kodak Co. (EKDKQ) will seek to step closer toward the
exit from bankruptcy protection by asking a judge to let its
creditors start voting on its restructuring plan.
The Manhattan bankruptcy court on Thursday will review Kodak's
disclosure statement, the outline of its restructuring plan that
creditors will use to cast their votes.
That plan, which Kodak will ask the court to review in August,
would see Kodak exit Chapter 11 protection under the control of its
bondholders and unsecured creditors. Bondholders owed $375 million
would get 85% of Kodak's new common shares, while unsecured
creditors--a group that includes retirees--would get the remaining
15% on account of claims worth as much as $2.2 billion.
Assuming the company is worth $441 million at the time it exits
Chapter 11 protection, as it expects, the bondholders' controlling
stake would be worth $374.85 million and the unsecured creditors'
stake worth $66.15 million.
The plan also includes a settlement with Kodak's U.K. pension
plan, which is slated to take control of the company's
personalized-imaging and document-imaging businesses to satisfy a
$2.8 billion claim. Those businesses include Kodak's cameras,
retail photo-printing kiosks, photo paper, scanners and other
products and services.
Kodak's shareholders' equity would be canceled, and they
wouldn't receive any payment under the plan.
Based in Rochester, N.Y., Kodak sought Chapter 11 protection in
January 2012 and hopes to exit bankruptcy in the third quarter of
this year.
Residential Capital LLC on Wednesday will ask the Manhattan
bankruptcy court to let it pay back more than $1.1 billion it owes
to parent to Ally Financial Inc. and to send another $800 million
to bondholders.
By paying down its entire debt to its parent plus a portion of
the $2.1 billion in principal it owes to bondholders now, the
mortgage lender said it can eliminate millions of dollars in future
interest payments. Interest payments to bondholders alone could
reach $20 million a month and that cash, ResCap said, could instead
go to its other creditors.
"Each dollar of interest that accrues on the [bondholders']
secured claims is one less dollar available for distribution to the
debtors' unsecured creditors," ResCap said in court papers.
Paying down the debt to Ally, ResCap said, constitutes "a
critical component" of ResCap's recent deal with its parent and
unsecured creditors committee over its plan to exit Chapter 11.
The deal calls for Ally to pay $2.1 billion to ResCap and its
creditors, a group that includes American International Group Inc.
(AIG), Paulson & Co., MBIA Inc. (MBI) and Allstate Corp. (ALL).
Some of the creditors had threatened to hold the government-owned
Ally responsible for billions of dollars of its subsidiary's
mortgage losses.
Also next week, Arcapita Bank will seek the Manhattan court's
approval for its creditor-payment plan.
The Bahrain investment firm is due in court Tuesday for a
hearing on the plan, which it gives it time to exit its investments
and use the sale proceeds to pay creditors. Arcapita is also
seeking to secure $350 million in exit financing from Goldman Sachs
Group Inc. (GS), which has offered to replace Arcapita's existing
bankruptcy financing with a $175 million financing offer.
The company recently cleared a major hurdle to confirmation of
its creditor-payment plan: it has resolved the objections of key
creditor Standard Chartered Bank. Under a settlement, the lender's
claims would be paid in cash from the proceeds of the exit
facility, in return for which it will accept the plan.
Arcapita, which filed for Chapter 11 protection in March 2012,
manages real estate, infrastructure, private equity and venture
capital investments that are compliant with Islamic Sharia law.
-Patrick Fitzgerald contributed to this article.
Write to Jacqueline Palank at jacqueline.palank@dowjones.com
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