Kodak continues bankruptcy restructuring by selling division

Over the years, many Chicago photographers have undoubtedly shot countless rolls of Kodak film. In addition to traditional film, the photo giant has a number of other operations, such as Kodak Gallery, which allows customers to share photos online without cost. Customers can then pay if they want their photos saved on a DVD or made into prints.

But Kodak has recently sold that part of its business after approval from a bankruptcy judge. The company filed for Chapter 11 bankruptcy in January of this year. The purchaser in the sale is Shutterfly, Inc., which paid $23.8 million for Kodak Gallery. The two companies offer similar services in the sharing and printing photography market, which is facing competition from the photo-sharing capabilities of social media websites.

The transfer of Kodak Gallery will occur on July 2, after which time Kodak customers will not be able to get into their accounts. Kodak informed their customers that they have the option of having their existing photos moved to a new Shutterfly account, or they can decide not to open a new account with the company by notifying Kodak.

It is not uncommon for a change in market demand to leave some of the longest-standing companies facing difficult financial challenges. But rescaling operations can be a vital part of the bankruptcy process to help businesses get back on track. Selling off various brands and subsidiaries can be a way for a company to return to core competencies and profitability. The bankruptcy process can facilitate these transitions by creating a schedule of repayment for some debts while discharging others.

Source: Associated Press, "Kodak to sell online-photo service to Shutterfly," May 7, 2012.

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