Eastman Kodak shareholders suffered another setback after a federal bankruptcy judge rejected their demand to set up a special committee to represent their interests in the company's bankruptcy proceedings.
US bankruptcy judge Allan Gropper also ruled that the company could continue its reorganisation plan after Kodak sought court approval to emerge from Chapter 11.
The troubled group's shareholders initially asked the court to set up an official equity committee to represent their interests in Kodak's bankruptcy after becoming concerned that they would lose their investments in the reorganisation plan.
However, Gropper rejected numerous motions and letters written, by shareholders in recent weeks, after ruling that he found no evidence that Kodak or its creditors were "hiding value" from shareholders. He added that the costs of setting up an official shareholder committee are "unreasonable" in light of the possible benefits generated from Kodak's reorganisation plan.
"The shareholders ... 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," said Gropper.
"However, the hearing produced no evidence of a higher value than (Kodak) has projected or of any likelihood such value exists."
Support from Unsecured Creditors
Kodak said in a court filing on Thursday that its reorganisation plan has the support of all classes of eligible creditors, including the holders of 77.9% of the general unsecured claims.
The shareholders' protest was the last major hurdle Kodak faced in order to gain approval from the US bankruptcy court.
The company's creditors "have clearly told us we have the right strategy for the future of Kodak. This significant endorsement of our plan enables Kodak to move toward emergence with the support of our creditors," Kodak CEO Antonio Perez said in a statement.
Bankruptcy Plan on Schedule
The New York-based firm filed for bankruptcy protection in 2012 after the company found it hard to manage its huge debt pile. It has struggled to remain competitive following the shift from physical camera film to digital photography. Prior to its bankruptcy protection filing, the company sold off some its units to focus on commercial and packaging printing.
However, Kodak said it is on schedule with its reorganisation plans and expects to emerge from Chapter 11 by the end of September.
Kodak's confirmation hearing is scheduled for 20 August in the US bankruptcy court for the Southern District of New York.
Meanwhile, a trustee with the US Department of Justice filed an objection with the court over hefty corporate bonuses given to executives like CEO Antonio Perez under the reorganisation plan. The trustee noted that the plan does not meet the requirements of bankruptcy code in paying incentives to employees.
The case is In re: Eastman Kodak Co et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.