Kodak Reportedly Preparing For Bankruptcy Auction Of Patents
Poor Kodak. At this point, they’re just along for the ride. The last few years have been rough on them, and they’ve made a few big decisions that haven’t panned out. I must admit that while my unsolicited advice to them was sound, it probably would have to have been put in place a decade ago for them to have avoided the current state of things. As it is, the WSJ has word that they are planning to file Chapter 11 and do a court-supervised auction of their many digital imaging patents.
It’s sad, but the truth is that while Kodak is very much still a valuable company, it’s simply not a viable business any more. Their efforts to change the business they’re in came too late — and now they’re in the business of going under.
In some ways, it’s a good call (not that I’m a big bankruptcy expert), but it’s also risky. Kodak has been trying to offload more than a thousand patents in order to gain the cash it needs to keep operating. It’s not clear what exactly they’d be doing after they sold off the most valuable part of the company, but they might have noted that “a living dog is better than a dead lion,” and opted for solvency and a lease on life.
Whatever their intentions, the patents haven’t sold. They sold their sensor business related assets, but the patents are still on the shelf. Why? Kodak practically invented the digital camera, and some of their IP must surely be useful to the likes of Sony or Samsung.
The problem, I’m guessing, is this: why pay full price when you know the store’s going out of business? If Sony and Samsung both wanted a set of patents, Kodak would keep them both informed if the other bid something, so they run little risk of having their targets slipped out from under their noses. And in the meantime, Kodak swirls endlessly towards bankruptcy, at which point the whole patent portfolio will be on the block for public bidding and unbeatable prices.
Unfortunately, it’s extremely unlikely that Kodak will bounce back from this. The only way they can live is by selling their core assets and taking a fortune in loans, and after that there’s nothing to do but sell the brand and find work as a badge for other people’s products. Oh fate most ignominious! But it is their own doing.
Kodak braces for Chapter 11 bankruptcy if patent sale stops
updated 03:40 pm EST, Wed January 4, 2012
Kodak is drafting Chapter 11 bankruptcy filings in the event it can't sell patents in the next few weeks, insiders asserted Wednesday. The proposed plan seen by the Wall Street Journal would see the camera legend possibly enter bankruptcy later this month or in early February. The reorganization would see it get $1 billion of debtor-in-possession funding and sell its entire library of 1,100 patents through a bankruptcy auction rather than a typical process.
Citigroup, JPMorgan Chase, and Wells Fargo are said in the talks along with bondholders. Proxy talks with a third-party financing group, through Cerberus Capital Management, were also reportedly underway.
Bankruptcy could be partly deliberate and an advantage for Kodak. A lack of patent sales in the past few months has been partly blamed on buyers having jitters over Kodak going bankrupt. Along with that certainty, it could force bidders to publicly outline their bids. Some health care and retirement payouts might also go away, saving hundreds of millions of dollars from when the company was much larger.
Steps have already been taken to sell off its image sensor business and has warned that it might delist from the NYSE.
Kodak has been pushed to the brink both by its inability to fully transition to digital as well as a failed gamble on patents. The firm at one point planned to base its business on patents rather than products, licensing to LG, Motorola, and others as well as suing Apple and RIM. Its plan backfired after it didn't get the ruling it wanted and faced major delays on rulings that could see it bankrupt or even liquidated before it could see a verdict.
By Electronista Staff
Read more: http://www.electronista.com/articles/12/01/04/kodak.readying.chapter.11.filing.as.precaution/#ixzz1ic6upKyb
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