Bankrupt Eastman Kodak Co. is notifying its retirees that their benefits may be impacted as part of the bankruptcy process.
Kodak retirees across the country will soon be receiving letters from the company about the bankruptcy proceedings. Copies of the material are also available online at www.kodaktransforms.com/retirees/.
According to the company, which filed for Chapter 11 bankruptcy protection Thursday, retirees who receive health care, dental, life insurance and survivor income benefits will continue to do so — at least for the short term.
“While we do not expect any immediate changes to these plans as a result of the filing today, Kodak needs to ensure that our legacy cost structure — including these retiree benefits — is fairly apportioned and scaled for a company of the size we are today,” Kodak said in its information to retirees.
“Therefore, we want to advise you that the company will be examining these costs and, as necessary, will seek to adjust them.”
Retirees who receive monthly annuities under the Kodak Retirement Income Plan (KRIP) can rest easy — these benefits are not expected to be impacted by the bankruptcy filing, according to the company.
The KRIP is a U.S. tax-qualified plan, and its assets are set aside in a separate trust. As such, federal law protects those assets from Kodak creditors.
However, those benefits could change if Kodak fails to emerge from Chapter 11. If that happens, the Pension Benefit Guarantee Corp. (PBGC) would likely take over the KRIP assets, and PBGC would pay retiree benefits as an annuity. PBGC could reduce those benefit amounts depending on the plan’s funding, according to Kodak.
Meanwhile, retirees who were classified as “highly compensated” under the tax code while employed by Kodak could see their benefits cut. According to the company, those retirees may be receiving supplemental pension benefits under the Kodak Excess Retirement Income Plan (KERIP) or the Kodak Unfunded Retirement Income Plan (KURIP), and these are unfunded plans paid out of company assets.
“Payments under the KERIP and KURIP have been discontinued as of the Chapter 11 filing date,” according to Kodak. “At this time, we are not legally permitted to make any payments from the KERIP or KURIP for service before the filing date. Kodak sincerely regrets the hardship that this will cause.”
It’s unclear just how many Kodak retirees still live in the region. Eastman Kodak was the parent company of the local Eastman operations for years. It spun off the chemicals division as of Jan. 1, 1994, forming Eastman Chemical Co. as a separate entity headquartered in Kingsport.
Employees who have retired from Eastman Chemical Co. since 1994 are not impacted by Kodak’s bankruptcy.comments powered by Disqus