The trustees of Kodak’s UK pension scheme have filed a claim for £1.8bn ($2.8bn) in the US courts against the US parent company Eastman Kodak, which filed for bankruptcy in January.

Punter Southall senior consultant Lorant Porkolab said that there are clearly some similarities between this case and the Nortel and Lehman case, such as the insolvent North American parent in Chapter 11 bankruptcy protection and a UK pension scheme with some material shortfall.

However, the key difference with the Nortel and Lehman case is that Kodak Ltd has remained solvent in the UK, that its pension scheme has not entered the PPF assessment period, and that the Pensions Regulator has not issued any formal request, in the form of a Financial Support Direction or Contribution Notice, to Eastman Kodak.

The link between Eastman Kodak and its UK pension scheme is stronger than what typically exists in an international group, Porkolab explained, as the company gave a guarantee to Kodak Ltd and the pension trustees that the scheme would be fully funded by the end of 2022.

The fund was only 59 per cent funded with liabilities of £1.6bn at the end of 2011. In 2010, the trustees agreed a recovery plan with Kodak Ltd, under which it would pay between £30m and £37m every year between 2011 and 2014, after which the sum would increase until the plan was fully funded.

Porkolab said: “These are fairly substantial contributions, in particular in the context of the current financial strength of Kodak Ltd which generated revenue of around £95m and operating profit of £11m in 2011.

“It remains to be seen if the trustees’ claim, which is interestingly the largest unsecured claim against Eastman Kodak, will be fully recognised in the US courts and how much of that the trustees will be able to recover in the Chapter 11 process. Furthermore, one may also wonder if the Pensions Regulator has any plan to intervene, and potentially strengthen the trustee’s claim.”

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