The agreement resolves a $1.2 billion retiree benefits liability but does not affect the tens of thousands of retirees' pensions, the company said in a statement.
Kodak, which filed for Chapter 11 bankruptcy in January, said the move results in "significant cost savings" and "liquidity enhancement." The company had been spending $10 million a month to provide the medical, dental, life insurance and survivor income benefits.
Kodak will provide the Official Committee of Retirees "a $7.5 million cash payment to support initial administration and benefit obligations, a $635 million unsecured claim and a $15 million allowed administrative claim that would have priority status in Kodak's reorganization proceedings," the statement said.
Kodak acknowledged the action "will pose challenges for retirees" but said it is one of many "necessary steps to put the company on a path to emerge as a profitable, sustainable company."
A Kodak retiree group, EKRA, said in a statement on its website that while it had not seen the details of the plan, "we are very disappointed that the information about such a dramatic change in health and welfare benefits became known via the public court venue.
"It is especially disappointing that neither Kodak nor the Official Retiree Committee, who worked on this for the past five months, felt it was important to communicate to retirees the direness of the Kodak situation nor in any way to indicate the Draconian result they were about to reveal," the retirees' association said.