A month after it filed for Chapter 11 bankruptcy protection, Eastman Kodak Co. asked a federal court Monday to allow it to cut health care benefits for thousands of retirees.
Kodak said in a letter to its retirees that ever since it filed for bankruptcy protection, it had sought to "balance the needs of our retirees with the needs of the Company."
Now, however, it is "clearer than ever that in order to remain a participant in the market tomorrow, we must put Kodak on a sustainable financial path today," said the letter, which was obtained by NBC station WHEC of Rochester, N.Y., Kodak's hometown.
In a motion scheduled to be heard March 20 in U.S. Bankruptcy Court in New York, Kodak said it wants to discontinue benefits under Kodak's medical plan for all retirees 65 and over and any who are under 65 but are eligible for Medicare. The motion says it would also affect current employees who are retirement eligible when they leave the company, along with their survivors and dependents.
The changes would go into effect May 1 if they're approved by U.S. Bankruptcy Judge Allan Gropper.
In its court filing, Kodak said the changes would affect about 16,000 retirees — those who retired after Sept. 30, 1991, meaning those over age 85 or so wouldn't be affected. The company would save about $13.5 million this year and about $20.5 million a year afterward, it said.
Kodak told its retirees that the change is "one of many difficult but necessary decisions the Company needs to make in order to establish a financially sustainable course for the future," saying retirees' health care payments were "legacy costs" that shouldn't transfer to whatever new company emerges from bankruptcy proceedings.
In an attached set of questions and answers, it referred retirees to "local insurance companies to find out what options are available in your area" or to the Medicare website.
The Eastman Kodak Retirees Association, a nonprofit group representing about 63,000 retired Kodak workers, dependents and beneficiaries, said it doesn't intend to fight for reinstatement of lost benefits.
"We are only focusing on how to manage any possible further declines in the future," it said on its website.
The motion doesn't affect Kodak's pension plan, which is being overseen by the federal Pension Benefit Guaranty Corp.
Kodak filed for Chapter 11 protection on Jan. 19 as part of an arrangement to obtain a $950 million credit line to allow it to stay open while it reorganizes. Two weeks ago, it said it was getting out of the film and camera business altogether, focusing on printing and licensing its brand to other camera makers.