I am not anti-film, but the patient is in cardiac arrest. It's death can be postponed perhaps forever if the right steps are taken now.

If you look at Kodak's books you see that Kodak is weighed down by pension and medical obligations. Chapter 11 will erase those. Very sad for those whose incomes and comfort disappear.

Kodak is also weighed down by debt accumulated to run its film production and distribution while the demand curve plummeted. Debt subsidized film for a very long time as Kodak de-leveraged production assets (blew them up). Gross revenues appear to have been maintained by the cinema side, but now that is collapsing as well. All analog product lines are unit-by-unit profitable, but the gross revenues are still in steep decline with no bottom. For a public company this is extremely problematic. They cannot borrow money to subsidize a declining product line, and they risk killing their other product lines if they cost-shift. Chapter 11 is aimed at unloading their film biz.

Debt was also used to fund the new investments in print operations and other digital positions. Those operations are actually profitable both against capital and operations, but they are burdened by the legacy debt and pension/medical loads. In fact, the Q3 statement shows the despite underlying economic headwinds, revenues were up. They had to discard some digicam lines but their imaging divisions made money. Sans the debt carried across all operations, and the benefits as well, this would actually be a success story. I do question, however, the long-term viability of the small printer market. Kodak sold their sensor business to deliver ink under a brand name. Kodak becoming a brand carrier for Made in China plastic ink boxes is a real decline in manufacturing and technical prowess. Not an Eastman concept. Truly tragic.

But for shareholders only the digital items contain any growth potential. This is backed up by the patent portfolio. The analog business is dead weight because there is falling demand. So Kodak will shed their film biz. As a public company and soon a creditor-demand company, they really have no choice.

But this is the troubling part. In order to buy the film biz, the new player, spin-off, white knight, venture capitalist, or whatever, will need to buy 3 things:

1) Buy the assets. They'll need the physical factories, the distribution channels, the IP for the analog side, and probably the Kodak brand name. Through Chapter 11 these might be had for a song. After all, digital Kodak needs these gone and the worth to Kodak shareholders may be nil because their operational overhead is a drag. Just get them off the books because further cost-shifting is not an option.

2) Buy the operational capital. Those factories require some pretty serious overhead to keep running and the lights on. They need raw materials and other supplies. They need to re-hire all the staff who just lost their pensions and medical benefits. They need to (desperately) retain the core engineering and R&D components and pay them in contract regardless of profitability. They need to keep their supply channels open or set up a new centralized web based delivery shop.

This is all pure overhead. Many companies borrow against future earnings to start a new business. That's the whole point of venture capital: keep the lights on while the market grows. Except this market is shrinking and no one knows the bottom. So whoever comes in will have to have money to burn while trying to find market bottom.

3) Buy the money. As noted above, most companies borrow money on a risk-weighted system to fund these concepts, especially through Chapter 11 and bankruptcy financing, because there is often a core, viable market. But with film the core market appears to be based on selling razor blades to people when virtually no one is making razors (cameras) anymore, and used razors are being sold at flea markets or junked. In the long run, borrowing money to fund both the asset purchase and the operational capital is a huge issue because without movement in the film camera market, there is no market for film in the on return on investment horizon. By definition there can't be. The cost of buying money is interest.

So no one will lend a new Kodak film operation money unless it is secured through surety against external assets. That's highly unlikely unless the new Kodak keeps film and cost-shifts. Certainly some creditors will not accept that proposition. The film business could be shuttered entirely because none can come up with enough operational capital or borrow it. Even a small volume operation is highly problematic because the scope of the production facilities etc. just do not scale down well, and core engineers will look elsewhere for personal job security (Dow, 3M, the oil patch). Roll, cinema, and cartridge film require large-scale industrial system to manufacture and precise, legacy knowledge through core personnel to execute.

A Kodak bankruptcy and a scenario where the film division is a troubled asset unable to find operational purchaser sends shockwaves through the remaining film producers and all those who depend on film processing, distribution, etc. It sends a signal to all creditors of Fujifilm, Ilford, and any other company making film that the market is in decline and your credit availability is under scrutiny. It sends a signal to all who extend credit to small photofinishing shops. It sends a credit risk signal to all suppliers of anything to do with analog film production and processing, period.

Any new creditors are going to be looking for the razor manufacturers as well, not just satisfied to keep lending money or extending credit to a guy making razor blades. Fuji is probably immune as they have almost entirely transitioned their biz to digital, but Ilford may struggle even if they gain some Kodak customers.

Someone used a car analogy. If I wanted to start a company making parts to go into biz making parts for pre-1980 Mustangs and Corvettes, my creditor is going to check to see how many of those vintage cars exist on the current market and what the depreciation is. If they see my market is a continually shrinking market, I will not get very limited credit. In short, the whole analog film business could be credit-starved (like greece) because of what is sign on with Kodak.

I focus on the lack of a coherent film/camera/processing dynamic because the Kodak shockwave is what every creditor throughout the industry is now going to zero in on. Even Mom & Pop photo labs clinging to a core market may feel the repercussions from this if they need to buy a refurbished Fuji Frontier on credit and such.

That's where I am coming from. It's my perspective because I have a background in this.