Fresno, CA — The once mighty giant Eastman Kodak company that was founded by George Eastman succumbed to the poor economy forcing it to file for Chapter 11 bankruptcy. For a company that has been around since 1889, an estimated 1,100 digital patents were acquired by Kodak. And these patents went up for auction to help pay for the companies debts but far from the expected bidding wars, the auction kind of fizzled out.
As part of its Chapter 11 bankruptcy reorganization, some of the assets of Kodak had to be auctioned to pay off its creditors. Part of the assets that were auctioned off was Kodak’s portfolio of 1,100 digital patents. The biggest companies to join the bid were Google and Apple. Prior to the auction Apple sued Kodak for claiming ownership of 10 digital patents but was only successful in claiming 8. There was even news that Apple was trying to sabotage the Kodak bankruptcy auction because of the 2 digital image patents that they were not able to get from Kodak.
From the looks of it Google and Apple had been low-balling Kodak from the way the bid is going on. The patents failed to even get near $500 million. But the Kodak bankruptcy auction was of a complicated nature, the company leaned to bids that offered to buy the entire portfolio but the bids were coming in all forms, sizes and shapes. Other companies like Samsung Electronics Co., HTC Corp., LG Electronics Inc., private equity firm Vector and even Microsoft which teamed up with Apple joined in the bidding war. But with all the big businesses showing their interest, the initial bids were quite disappointing at $150 million and $250 million. Far from the $2.2 billion and $2.6 billion value that Kodak had pegged on their patents.
The company had divided their portfolio into two parts: the first portfolio has to do something with the capture and processing of images on tablets, cameras, and smartphones; while the other portfolio deals with storage and analyzing images. There were more groups interested on the first portfolio since there is a strong market for gadgets that are multifunctional and creates ease in capturing, processing and sharing images online.
If the bidding does not improve throughout the weekend, this will signify that Kodak will still need to trek the very long and winding road to recovery from bankruptcy.
It is sad that an iconic company such as Kodak has fallen from grace and is now scampering to find much needed revenue to continue its operations and pay off its creditors. Who didn’t owe a Kodak camera at one point in their lives? And to think that the digital camera was a Kodak invention to begin with but the camera failed to foresee that niche market and failed to evolve as a company.
When Kodak filed for Chapter 11 bankruptcy reorganization the declared value of their assets amount to $5.1 billion and a debt load amounting to $6.8 billion. One of their biggest creditor is Citigroup Inc. which gave Kodak a $950 million bankruptcy loan. The loan provided by Citigroup was a debtor-in-possession financing and carried an 18-month credit facility for Kodak to continue operating its business. The company has until February of 2013 to present a reorganization/payment plan to the bankruptcy. Worst case scenario, if things don’t work out Kodak will cease operations and will just be a nostalgic memory in the hearts and minds of Americans.