Kodak did not mislead investors before bankruptcy - court
By Jonathan Stempel | November 10, 2012 6:49 AM EST
Eastman Kodak Co
U.S. District Judge Harold Baer on Thursday dismissed a shareholder lawsuit against Chief Executive Antonio Perez and three former Kodak executives. The Rochester, New York-based company was not a defendant because it is in Chapter 11.
Shareholders led by Bret Jones, who claimed to have lost $720,384 (452,986 pounds) by investing in Kodak stock, accused the company of making false and misleading statements that suggested optimism it would become profitable, maintain sufficient liquidity, and sell a digital patent portfolio once thought to be worth as much as $3 billion.
The shareholders also said that in the four months leading up to Kodak's January 19, 2012 bankruptcy filing, the company misled investors about its intention to seek protection from creditors.
Baer concluded, however, that there was no showing that the executives intended to defraud anyone, and indeed they had used their "best efforts" to successfully transform the company.
The judge said there are "serious policy reasons" not to force nearly-insolvent companies to disclose their plans too soon. "No multi-billion dollar company would file for bankruptcy without first engaging in internal deliberations," he said.
Baer added that many of the alleged fraudulent statements, including Perez's expression of confidence on February 3, 2011 that Kodak would transform into a "sustainable, profitable company," were too general for reasonable investors to rely on.
Other defendants included former chief operating officer Philip Faraci; former chief financial officer Antoinette McCorvey; and Pradeep Jotwani, a former president of Kodak's consumer businesses.
The class period ran from January 26, 2011 to January 19, 2012, during which Kodak's share price fell to 30 cents from nearly $4. Kodak shares once traded above $94.
Aelish Baig, a partner at Robbins Geller Rudman & Dowd representing the investors, did not immediately respond to requests for comment.
Jonathan Dickey, a partner at Gibson, Dunn & Crutcher representing the defendants, did not immediately respond to similar requests.
Kodak filed for bankruptcy after failing to keep up as consumers and rivals shifted to digital photography from film photography.
The company has shuttered its digital camera business, set plans to stop selling inkjet printers, and been exploring options to sell the digital patents after failing to win acceptable bids in an August auction. Kodak has said it hopes to emerge from Chapter 11 next year.
(Reporting By Jonathan Stempel in New York; Editing by Nick Zieminski)
Most Popular Slideshows
- Prince Harry & Camilla Thurlow Getting Serious, St. Tropez Holiday Before The Prince’s 30th Birthday [PHOTOS]
- Prince William & Kate Middleton Caught Flirting In A Countryside Dinner Date [PHOTOS]
- UEFA Champions League Draw Result and Replay: Arsenal Joins Toughest Group, Cristiano Ronaldo Named Best Player In Europe [PHOTOS and VIDEO]
- Prince William & Kate Middleton Boards London Train in Casual Disguise, Royal Couple’s Incognito Plan A Huge Hit [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- Apple iPhone 6 Actual Release Date after September 9 Confirmed 128GB Variant with New Resolution
- Pricey iPhone 6 on Release Date Likely but with 3X Retina Resolution & Mobile Payment Service – Reports
- Google Nexus 8 Confirmed as HTC T1 aka Volantis/Flounder with Freshly-Leaked Specs & Features – Reports
- Moto G2 Release Roundup: Specs, Pricing, and Release Date Details
- PlayStation 4 Killing Xbox One Costing Microsoft Millions But It's Fine
- Nexus 6 on Release Date Confirmed with Phablet-Size Display as FCC Filing Hints of 5.9-Inch Screen
- Europe, US Next on ISIS’ Hit List, Says Saudi King; Seized ISIS Laptop Reveals Terrifying Bio-Warfare Plans