Eastman Kodak late on Monday sought to set up a confidential auction for its portfolios of over 1,100 patents, after the bankrupt film pioneer acknowledged it had encountered difficulty drawing a lead bidder.
The concession is likely to raise questions again about whether the 132-year-old company will be able to pull off the linchpin of its reorganization plan: selling off some of its most valuable intellectual property to raise money for its turnaround effort.
Kodak filed for bankruptcy in January after years of failed efforts to turn itself around by finding a new direction, most recently by becoming a digital printing company.
In a court filing made in bankruptcy court in Manhattan, Kodak said it was having difficulty in drawing in a “stalking horse” bidder, blaming what it said was a reluctance by potential buyers to disclose their identities or their bids. Stalking-horse bids establish a floor for offers, and give potential buyers added protections.
Instead, Kodak is seeking to allow bidders to remain confidential, disclosing only the winning buyer and price in a so-called naked auction.
“Interest in competitive bidding for the digital imaging patent assets has been chilled by potential purchasers’ reluctance to act as a ‘stalking horse’ bidder in a conventional, public auction,” lawyers for the company wrote in the filing.
The company said in a statement on Monday that 20 potential bidders had signed confidentiality agreements and been given access to sensitive data.
To defend its decision, Kodak cited the example of Nortel Networks, the Canadian telecommunications equipment maker that sold off a similarly huge collection of patents. Its stalking-horse bidder was Google, which bid $900 million. But the winning bid came from a collection of rival technology companies — a diverse group that included Apple, Microsoft and Research in Motion — that paid $4.5 billion.
Here is what Kodak lawyers wrote in the filing:
- Kodak Patent Auction Facing Hurdles – WSJ.com (nadernazemi.com)
- Kodak Seeks Court Approval for Confidential Patent Auction Plan (pcworld.com)
- Kodak’s Patent Allure Fades (allthingsd.com)