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Kodak files for Chapter 11 bankruptcy after all

In our last post, we talked about how Eastman Kodak Co. may file for bankruptcy. Now, there is no "may." The 131-year-old company filed for Chapter 11 bankruptcy protection on Thursday.

Now, it is true that Kodak made several missteps in its past, but there are still important lessons here that small business owners in Chicago can learn.

First, Kodak has tried very hard to right itself financially. It recently spun off an old and underperforming division, reorganized itself and put a lot of resources into its digital imaging sector. That all was not enough to correct its balance sheets. The takeaway here is even if a business owner does all he or she can, sometimes outside factors render those efforts insufficient. Bankruptcy is not a mark of failure. Rather, it's a white flag that says "I did the best I could and came up short. Now I need a chance to start over."

Another lesson to learn relates to timing. Since 2004, Kodak has reported only one year of profitability. Although we don't know for sure, it seems that Kodak was willing to keep chugging along even when there were signs it should have stopped and reassessed. The point is that while small business owners should not give up at the first sign of trouble, it is not necessarily a good idea to wait until the last minute, either. Even having a conversation with a bankruptcy attorney may be a good idea because you might never need to use what you learn, but at least you will be aware of all possible options.

Kodak officials have vowed to use the bankruptcy as a chance to get ship-shape again and return to profitability. It will be interesting to see what choices the company makes going forward.

Source: The New York Times Dealbook, "Eastman Kodak Files for Bankruptcy," Jan. 19, 2012

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