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Bankrupt Kodak Cuts Retirement Benefits, The New Business Medicine For Expensive Promises

Larry Elliott spent 30 years working at Eastman Kodak Co., and he retired from the finance division in 1991, confident in the company’s promises of health insurance for life and a survivor income benefit that could help support his wife when he dies.

But 21 years later, Elliott is now 75, and Kodak filed for bankruptcy protection in January. As part of the company’s restructuring, U.S. Bankruptcy Judge Alan Gropper recently approved ending those two benefits as of Dec 31, 2012 for some 56,000 retirees. Pensions are not affected by this ruling.

The move, described by Kodak as necessary for its successful restructuring, took Elliott and other retirees by surprise.

Nevertheless, it was not unusual, says Greg Charleston, Atlanta-based senior managing director of the turnaround and restructuring firm Conway MacKenzie. “Bankruptcy allows companies to get out of some very expensive promises that were made many years ago,” he says.

Bankrupcty for what ails you..

 

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