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(Reuters)—An Eastman Kodak employee filed a civil lawsuit against Kodak's board members and other fiduciaries of the photography companies' retirement plans, saying they breached their duties as the company was spiraling toward bankruptcy.
Mark Gedek, who continues to work at Kodak, said in the lawsuit that he is a participant in the Kodak Employees Savings and Investment Plan as well as the Kodak Employee Stock Ownership Plan. The board members and directors of those plans continued to sell shares to employees and invest in them ahead of the bankruptcy, he said.
"Kodak believes the suit is without merit, and we will vigorously defend against it," Kodak spokesman Christopher Veronda said in an emailed statement.
Kodak filed for bankruptcy in mid-January, saying it would use the bankruptcy court process to try to sell patents and shed other assets to bring costs and revenue in line. Typically in bankruptcy, shareholders' equity is worth nothing.
Kodak shares, which trade for 34 cents on the pink sheets, were trading at 55 cents on Jan. 18 before the company filed for bankruptcy.
Gedek said in the lawsuit, which seeks class-action status, that the directors and officers did not disclose to stock-plan participants complete information about Kodak's dire financial condition and kept its investments in the company's equity when it was no longer prudent.
In the suit, Gedek said the company should have known it was suffering from a dying technology; was unable to bring new, profitable products to the market quickly enough; could not generate enough cash from patent lawsuits, and was suffering from a liquidity crisis.
He also claims that those factors caused the stock price to collapse and caused significant losses to the plans and the plans' participants.
Among those named in the lawsuit as defendants are Kodak CEO Antonio Perez, members of the company's board of directors, the chairpeople for the savings and investment plan and the plan administrator.
A Kodak spokesman was not immediately available to comment.
ROCHESTER, N.Y.—Eastman Kodak Co. filed for Chapter 11 bankruptcy protection Thursday listing overall assets of $5.1 billion and debts of $6.75 billion, according to the company's petition to U.S. Bankruptcy Court in New York.