Think of Chapter 11 as the first step in bankruptcy, and a move to avoid Chapter 7. Kodak is entering Chapter 11, which entails an effort to restructure the company and come out of it a leaner, profitable enterprise. Chapter 7 entails dissolution, and there is no coming back from that step.
Does this mean layoffs are coming?
Almost certainly yes, but there's no way to know exactly how many at this point. Kodak has spent years trimming down from its peak of employment 30 years ago. Company leaders have spent the past decade declaring that Kodak has responded to a changing market with appropriate job cuts and priority shifts. What else is left for the company to eliminate? We'll find out.
Do companies survive Chapter 11?
Yes, but it's not easy. There are reasons that Kodak is in this situation, and those reasons will make it challenging for Kodak to emerge a viable company going forward.
Wall Street analysts have a rough estimate for how many companies survive after filing Chapter 11: about 5%. That gives Kodak a 1-in-20 shot of long-term survival, at least as the company we've always known. But the odds are probably better than that; after all, the larger a company is, the more likely it is to survive Chapter 11.
Here are recent examples of companies surviving after Chapter 11: most major airlines including Delta, American, and Southwest; K-Mart; Delphi. There are more.
Who owns the company?
For now, not much changes. Chapter 11 allows Kodak to keep control and try to slim down to become profitable again. Chapter 7 would mark the end of company control.
What about customers?
It's worth visiting KodakTransforms.com, a website the company created to explain how Chapter 11 affects everyone who might be impacted in some way. For customers, shipments will continue and warranties will continue to be honored. Again, for now, nothing changes.
How about benefits?
CEO Antonio Perez released a video, saying that benefits would continue. Retirees will follow the developments closely.
How long until we know whether this restructuring was a success?
Kodak is projecting an 18-month transition. It's possible we'll get a good view of Kodak's future - and whether there is one - before summer 2013. But the company is seeking patience to make this work.
Is the stock worthless?
Shares open at $.55 today. George Conboy of Brighton Securities tweeted, "Kodak common stock will still trade, but by the end of bankruptcy, it's probably worthless. Caveat emptor."