Money Matters - Simplified

Eastman Kodak files for auction of its 1,100 patents

Eastman Kodak Company has filed a motion seeking approval of bidding procedures for the prompt bankruptcy auction of over 1,100 patents.

The besieged Eastman Kodak intends to resort to a confidential auction for its 1,100 patents after it failed to draw a lead bidder.

The patents in question are known as Kodak Imaging Systems and Services (KISS) Patent Portfolios and play a pivotal role in capturing, manipulating, and sharing of digital images.

Only Winning Bid to be Divulged
In a court filing made at the Manhattan bankruptcy court, the 132-year-old company disclosed that it had problems drawing a “stalking-horse” bidder. The company suggested that potential suitors were reluctant to disclose their identities or their bids.

Now, the company intends to go in for a “naked auction” wherein only the winning bid and the buyer would be announced.

The company divulged that 20 potential suitors have already signed confidentiality agreements. These potential buyers have been given access to sensitive data.

“Interest in competitive bidding for the digial imaging patent assets has been chilled by potential purchasers’ reluctance to act as a ‘stalking horse’ bidder in a conventional, public auction,” Kodak lawyers wrote in the filing.

“From observing this experience, potential bidders for the digital imaging patent assets are likely to be reluctant to invest considerable time and resources in negotiating a stalking horse bid, disclose sensitive information, and yet fail to obtain the assets through the auction process,” the filing read.

The Way Forward
The film pioneer, as a part of its restructuring plan, intends to raise money by putting up its most valuable intellectual property up for grabs. The resources so mobilized would be used to fund the company’s turnaround plans.

Kodak hopes to get the go-ahead for the auction in the court hearing scheduled July 2. If it gets the court’s nod on the expected date, the auction will be held in early August, and the highest bid would be announced by mid-August.