Eastman Kodak Co. (EKDKQ), the photography pioneer that filed for bankruptcy, can reject a deal for naming rights to the theater in Los Angeles that hosts the annual Academy Awards show, a judge ruled.
U.S. Bankruptcy Judge Allan Gropper in Manhattan approved a request today by the company to end the Kodak Theatre sponsorship agreement to save money as it restructures. The approval comes less than two weeks before the film industry’s Oscar awards show, set for Feb. 26.
“They have due regard for the interest of their creditor body, and they just don’t want to pay this money for the next nine years,” Gropper said at a court hearing.
Kodak also today won approval to borrow the full amount of a $950 million financing commitment as it restructures. Gropper approved the financing after Kodak reached an agreement with noteholders that initially opposed the debt package. The judge earlier approved $650 million in borrowing when Kodak filed for bankruptcy.
“A great deal of effort has been expended on very tough negotiations,” the judge said.
The Kodak Theatre agreement required Kodak to pay $72 million in annual installments over 20 years, according to a court filing. Kodak pays $3.6 million a year and has $38 million in payments left on the contract, Pauline Morgan, a Kodak lawyer, said in court.
Kodak said in a court filing that the costs of the agreement outweigh any benefits from the naming rights and that rejecting it was in the best interest of the company and its creditors.
“It’s tantamount to handing the keys over to the landlord,” Morgan said about the rejection.
Thomas Leanse, an attorney for the theater’s owner, said in an e-mail after the hearing that he didn’t know whether the Kodak name would stay on the theater for the Academy Awards show.
The case is In re Eastman Kodak Co., 12-10202, U.S. Bankruptcy Court, Southern District of New York (Manhattan)