19 January 2012 Last updated at 13:59 GMT
Eastman Kodak, the company that invented the hand-held camera, has filed for bankruptcy protection.
The move gives the company time to reorganise itself without facing its creditors, and Kodak said that it would mean business as normal for customers.
The company has recently moved away from cameras to refocus on making printers, to stem falling profits.
The 133-year-old firm has struggled to keep up with competitors who were quicker to adapt to the digital era.
Announcing the move to seek bankruptcy protection, Antonio Perez, Kodak's chairman and chief executive, said: "The board of directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak."
The company said it had already arranged a $950m (£615m) credit facility from Citigroup.
The bankruptcy protection move by Kodak affects its operations and companies in the US, but the company said its non-US subsidiaries were not included in the move and would continue to operate as usual.
Earlier this month, the New York Stock Exchange told Kodak that it could be delisted from the exchange if it could not get its stock price back above $1.00 per share.
Kodak fell out of the Dow Jones Industrial Average of 30 top US companies in 2004.Transformation
Since becoming chief executive, Mr Perez has been responsible for steering Kodak away from its traditional market in cameras to focus on home and commercial printers.
However, the firm has failed to stop its plunging profitability.
The firm said earlier this year that it was pinning its hopes on its printer, software and packaging businesses, with the aim of expanding them to account for 25% of its income by 2013.
It reorganised its business units into two rather than three, renaming them consumer and commercial.
"Even though film and developing is a dead business, there is still money to be made in ink and other supplies," technology commentator Larry Magib told BBC World.
"But Hewlett Packard, Canon and Epson have those markets. Kodak does have printers, but it has not been able to succeed in making money from them," he said.
The move to seek bankruptcy protection comes after Kodak failed to sell its catalogue of digital imaging patents last year. At the time, Kodak warned that it would run out of cash if it did not find a buyer by the end of 2011.
"Now we must complete the transformation by further addressing our cost structure and effectively monetising non-core IP assets," said Mr Perez on Thursday.Reorganisation
Former Kodak vice president Don Strickland insists the firm's late entry into the digital market is a key factor in its recent troubles. He claims he left the company in 1993 after he failed to get backing from within the company to release a digital camera.
"We developed the world's first consumer digital camera and Kodak could have launched it in 1992.Continue reading the main story
"We could not get approval to launch or sell it because of fear of the cannibalisation of film," he told BBC News.
Although Kodak was one of the original inventors of digital photography, it failed to keep pace with developments in the market and competitors including Fuji steadily eroded its share of the market.
Since 2003, Kodak has closed down 12 manufacturing plants.
Mr Strickland believes the firm has little chance of surviving long term.
"There will be no more 'Kodak moments' - after 133 years, the company has run its course."
Kodak employs 19,000 workers, but it is not known how many may be affected by the reorganisation.
In its 1980s heyday, the company employed 145,000 people in locations throughout the world.
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