More than 56,000 Kodak retirees got a rude jolt this week when a bankruptcy judge agreed with the company's request to terminate their benefits.
By the time Kodak emerges from bankruptcy--if it perchance achieves even this moderate goal--it would have a tiny footprint. The company's management is reorganizing Kodak as a "much smaller, leaner enterprise focused on commercial, packaging and functional printing and enterprise services." It will also have lighter debts and a much reduced retiree obligation, thanks to bankruptcy court judge Allan Gropper who agreed Kodak should terminate many of its obligations to retirees," according to a report in USA Today. "Individuals may see their life savings lost or lose their jobs," the judge said. "Bankruptcy can have a particularly painful effect on retirees."
Really? Tell that to Kodak's retirees who counted on the company to continue providing
generous benefits long after they had left the company and who must now seek alternative medical and survivor obligations. Many of the ex-employees cited in news reports blamed Kodak's management for mismanaging the company's affairs and for failing to anticipate or foresee the major technological changes that ended its domination of the photography market.
The news that Kodak's current management wanted to ditch many employees and substantially cut retiree benefits hit me hard initially as I thought about all the naïve folks who based their lives on two wrong assumptions. The first was that the company would continue to be the undisputed leader in its market segment, and second, that it would unfailingly stick with the agreement to provide those benefits. They were wrong on both score.