Kodak's bankruptcy bills piling up

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ROCHESTER, N.Y., Jan. 17 (UPI) -- Storied New York firm Eastman Kodak has spent $125 million on attorneys and accountants after one year in bankruptcy, court papers indicate.

The (Rochester) Democrat and Chronicle reported Thursday medical benefits and insurance coverage for the company's employees came to a halt at the start of the new year, but legal fees continue to pile up.

Kodak has spent almost $22 million on the services of one law firm alone, the newspaper said.

The firm, Sullivan & Cromwell, is charging $1,150 per hour for attorney services and up to $850 per hour for non-attorney services, racking up 900 billable hours and 4,000 billable hours, respectively, records show.

Accounting giant Ernst & Young has earned $13 million in the first year of Kodak's bankruptcy. Corporate restructuring specialist Jim Mesterharm of consulting firm AlixPartners has earned $1.5 million.

On top of its own expenses, Kodak is responsible for paying the bills for legal services provided to creditor committees, a line-item that has cost $3.2 million so far.

In spite of the big numbers, "That doesn't shock me. Bankruptcy's expensive," Martha Salzman, assistant professor of accounting and law at the State University of New York at Buffalo told the newspaper.

"A modern Chapter 11 case is just hugely expensive. It goes in proportion to the size of the company and the complexity of the debt structure," said bankruptcy attorney Robert Rock.

Further, the company is duty-bound to seek outside help.

"You can't have the internal management do it. Theoretically, that's how Kodak got where it is today," said MaryAnn Monforte, clinical assistant professor of accounting at Syracuse University's Whitman School of Management.