Reuters–Eastman Kodak Co. replaced its chief restructuring officer on Monday in a surprise move coming just days after it filed for bankruptcy protection.
James Mesterharm, who works for the consultancy firm AlixPartners and was chief restructuring officer for Parmalat USA during the dairy company’s bankruptcy, will replace Dominic DiNapoli of FTI Consulting Inc. who was chosen last week.
Kodak said in a statement that there was no “disagreement or difference of opinion” with DiNapoli and provided no further explanation for the change. The company also said FTI would continue to work alongside AlixPartners on certain matters during the bankruptcy.
Ted Gavin of turnaround consultants NHB Advisors Inc. said Kodak may have discovered a conflict that would prevent FTI from serving. “This is a very unusual move,” said Gavin. “Typically the relationship of CRO is one, especially in large corporate bankruptcies like Borders or Kodak, that is vetted early enough that you have a chance to make sure that anything that gives rise to a replacement is addressed early in the process.” AlixPartners also replaced FTI during the restructuring of book store chain Borders Group Inc. Kodak, the photography icon that invented the hand-held camera, filed for bankruptcy protection last Thursday, capping a prolonged plunge for one of America’s best-known companies. The Chapter 11 filing makes Kodak one of the biggest corporate casualties of the digital age, after it failed to quickly embrace more modern technologies such as the digital camera — ironically, a product it invented.
Kodak’s noteholders objected to the company’s plans to borrow nearly a billion dollars to fund its operations during its bankruptcy, arguing that the company does not have a viable turnaround plan. Michael Stamer, a lawyer who represents the noteholders, did not return a call for comment. “I don’t think there was a specific falling out,” said Mike Darland of turnaround consulting firm CRG Partners and a former Polaroid executive. “My first instinct was that FTI was conflicted with creditors or lenders or bondholders and it may not have been discovered initially.”