Kodak emerges from bankruptcy with pension plans intact
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When Eastman Kodak Co. emerged last week from its 20-month stay in Chapter 11 bankruptcy, it did so with its pension plans intact, a move that is drawing praise from the federal agency that likely would have taken over the plans had Kodak moved to terminate them.
“There have been times — far too many — when companies have entered bankruptcy and tried to unnecessarily shed their plans. Not Kodak. The company said they wanted to keep their plans going from the start and we applaud them for doing so,” the Pension Benefit Guaranty Corp. said in a statement Monday.
The PBGC noted that it served on a committee of Kodak unsecured creditors and worked with the Rochester, N.Y.-based company to ensure the plans, which have about 63,000 participants, would continue.
By keeping its pension plans, Kodak took a different path compared to some other big organizations, such as United Airlines Inc. and US Airways Group Inc., that filed for bankruptcy and said they could not afford to maintain their pension plans, with the PBGC later taking over the obligation to pay promised benefits to participants.
Unlike those two airlines, whose pension plans were massively underfunded, Kodak’s plans have been relatively well-funded.
At the end of the 2012, its U.S. pension plans were about 87% funded, with assets of $4.85 billion and $5.58 billion in liabilities, according to Kodak’s 2012 10-K report.
With the rise since then in interest rates, which lowers the value of pension plan liabilities, and gains in the equities markets, the funding levels of Kodak’s plans likely are higher today.
A Kodak spokesman said the company was “gratified” with the PBGC comments and will let those comments “speak for themselves.”
