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After hearing arguments from Collins Ink Corp. and Eastman Kodak Co. lawyers, U.S. District Judge David Larimer on Tuesday said he would reserve a decision but rule quickly on Kodak’s request for a preliminary injunction to stop Collins from cancelling a contract to supply ink for Kodak’s Versamark printer line.

Collins would continue to honor the contract until Larimer rules, said Collins attorney Anthony Covatta of the Drew Law Firm Co. LPA in Cincinnati.

Citing concerns about the camera giant’s financial stability, Ohio-based Collins told Kodak in mid-October it would stop supplying ink for the room-size commercial printer line. Kodak responded by accusing Collins of breaching the contract and asking for a preliminary injunction in a lawsuit filed in the U.S. District Court in Rochester.

At an Oct. 24 hearing on the injunction, Collins and Kodak agreed to temporarily lay aside the dispute after Larimer urged the companies to negotiate instead of presenting arguments in court. After an hour or so of hurried talks, Gamblin, who was present in court, relented but only agreed to let the contract stand until the Tuesday court date.

During the hour and one-half hearing Tuesday, Covatta portrayed Collins as a $15 million “David” pitted against a $7 billion “Goliath,” contending that if Kodak were to file bankruptcy, “it would drag Collins down with it,” leaving the ink supplier “holding the bag for $2.5 million,” the amount of Kodak receivables on Collins’ books.

Not at all, countered Kodak attorney Fred Aten of Harter, Secrest & Emery LLP, calling fears of Kodak’s insolvency raised by Collins CEO Lawrence Gamblin “nothing but a ruse to steal our customers.”

Kodak has stayed current with Collins, honoring the 60-day terms stated in the contract, the Kodak lawyer said.

A bone of contention is Gamblin’s insistence Kodak pay for all shipments on a cash-on-delivery basis during a roughly eight-week period in which the companies would unravel their 10-year relationship.

In court on Tuesday, Covatta asked Larimer to order Kodak to post a $2.5 million bond if the injunction is granted.

Aten countered that no bond should be needed.

Larimer did not indicate how he would rule, but at times seemed more swayed by Kodak’s arguments, telling Covatta that, despite Gamblin’s concerns, “a contract is a contract” and seeming to be little swayed by Collins’ contention the contract’s Dec. 15 expiration date should let the Ohio-based Collins cancel the agreement with less than the 180-day notice Kodak attorney Aten maintained the pact’s terms require.

In the papers he filed Monday, Gamblin claimed Collins cancelled the contract only after Kodak refused to provide reasonable assurances Collins would be paid and made a backhanded reference to the possibility of a Kodak bankruptcy filing, an eventuality Kodak has denied is in the cards.

In papers filed last week, Kodak lawyer Fred Aten of Harter, Secrest & Emery LLP accused Collins of leaving Kodak in the lurch and trying steal the camera giant’s business.

“Collins Ink walked away from its contractual ink-supply obligations to Kodak and left Kodak without access to the inks required by more than 90 percent of its Versamark printing customers,” Aten said. “Collins Ink further reneged…by dishonoring Kodak’s exclusive right to distribute Collins Ink products and by using Kodak’s inability to meet its customers’ needs as an opportunity to steal Kodak’s customers.”

Not so, Gamblin countered in his Monday filing.

“Collins Ink has always said that it would sell Kodak any ink it needed. In light of the undeniable financial difficulties that Kodak continues to face, Collins Ink’s request in return is that Kodak simply provide Collins Ink with some negotiated assurance (prepayment, cash on delivery, etc.) that Collins Ink would get paid for its ink and that Collins Ink would have a high probability of being able to keep its earned payments, should Kodak’s financial situation grow worse. Unfortunately, Kodak has refused all of Collins Ink’s reasonable requests,” Gamblin states.....more click the link

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