As is often the case, bankruptcy affects those other than the debtor filing it; there is always a bit of a “ripple effect.” This is certainly true of the chapter 11 filing yesterday by industry giant Kodak after months of struggling to raise capital from the sale of patents and bringing patent licensing suits.
As reported in the Detroit Free Press today, others are worried about the company’s future and what it could mean to them. Its employees are worried about layoffs, retirees are concerned about the future of their health care coverage, and its creditors are preparing to take a hit financially.
Fortunately, from a jobs perspective, the ripple doesn’t go too far in the town of Rochester, New York, where Kodak is based. The Press quoted its mayor, Tom Richards, as saying that the bankruptcy has been more of a psychological blow than a financial one.
"We have a broader-based economy which is no longer dependent on one industry and one company. We're better off for it. Not what I wish this would happen, but it has happened, and we're just going to need to deal with it."
There is a bit of room for optimism for the company, though. Kodak has secured financing for operating costs and is still up and running with a brand name that still means something. But that doesn’t mean that people will keep their jobs, or that stockholders won’t take a big hit.
Even companies that are not in bankruptcy have been shedding jobs and closing stores. Just look at the recent bankruptcies by Friendly’s and A&P. On the other hand, it is better than a straight chapter 7 liquidation, which would create more of a tsunami than a ripple. At this point, people surrounding the filing are just hoping for the best.