Carestream, the medical imaging company spun off from Kodak a number of years ago, has filed for Chapter 11 bankruptcy protection.
The Rochester-based company said on Tuesday that it is undertaking the voluntary filing as part of “planned next step” to implement a previously announced recapitalization process with its lenders.
According to Bloomberg, in its filing, Carestream blamed the increased use of digital images by doctors and dentists instead of film-based X-rays, as well as a push by governments to drive down the cost of health care.
Carestream said that its lenders have overwhelmingly voted in favor of a ‘’prepackaged” restructuring plan, that will eliminate approximately $470 million of debt.
The company said in its statement that the process will significantly strengthen its balance sheet and position Carestream for significant success.
Carestream said that it expects to continue operating normally through the court-supervised process and complete the recapitalization in about 35 to 45 days.
“We are commencing the final stage of our recapitalization process, which will significantly enhance our ability to navigate a dynamic market,” said David Westgate, Chairman, President and CEO of Carestream. “Since announcing our recapitalization process in April, our lenders have remained overwhelmingly supportive, and we have worked constructively with them to complete the transaction.
Westgate said that Carestream expects to emerge from the process as a stronger partner to its customers, with significantly reduced debt.
Carestream employs approximately 685 people in Rochester and a spokesperson emphasized that "employees will not be impacted by the announcement," saying that this is "simply a means to execute the recapitalization plan announced a few months ago and allows the company to reduce more debt from its balance sheet than originally planned."
