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Concurrent Rights Offerings by Chapter 11 Debtors

By Michael H. Torkin and Chiansan Ma
December 20, 2013

Eastman Kodak Company conducted the first-ever parallel rights offerings in connection with its recently consummated Chapter 11 plan of reorganization ' one conducted in compliance with Section 1145 of the Bankruptcy Code and the other with Rule 506 of Regulation D under Section 4(a)(2) of the Securities Act of 1933 (the Securities Act). Kodak raised approximately $406 million for approximately 85% of its new common equity. Six institutions (the Backstop Parties) agreed to backstop the rights offerings.

The structure was designed to raise capital for Kodak's emergence from Chapter 11 through a public offering and a separate private placement of reorganized Kodak equity to a pool of Kodak's eligible unsecured creditors, without requiring that the offerings be registered with the Securities and Exchange Commission (SEC) pursuant to the Securities Act.

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