Phoenix Bankruptcy Law News

Kodak May Call Off Patent Auction, Set Up Licensing Company

Bankrupt Eastman Kodak has been counting on a patent auction to give the company a much-needed cash infusion.

Last month, the auction for Kodak's 1,100 patents was held, but the bids left much to be desired, NBC News reports. Now the company says that it may call off the sale and instead license its patents to others.

Kodak estimates its digital imaging patents to be worth about $2.6 billion. The patents have played a key role in the company's restructuring and are a huge asset going into the future.

That's because Kodak now hopes to shift its business focus from consumer photography to commercial packaging and printing services. Commercial printing currently makes up about 75% of Kodak's business. By licensing the patents instead of selling them, Kodak could add a new revenue stream from companies looking to apply Kodak's technology to their own businesses.

Kodak says that it will continue to talk with its affiliates about selling the patents. However, if a sale fails to materialize, the company says it will create a licensing company for the patents "as a source of recovery for its creditors."

Kodak filed for Chapter 11 bankruptcy protection in January after years of declining profits. The rise of digital photography was probably to blame for that.

In a Chapter 11 bankruptcy, companies often restructure and work toward becoming profitable again by closing branches, selling assets, renegotiating contracts, and laying off workers. On Monday, the company announced that it would be cutting an additional 1,000 jobs by the end of the year.

Kodak has filed documents with the U.S. bankruptcy court in Manhattan that will delay "until further notice" a patent sale hearing that's scheduled for Sept. 19. Stay with this blog for further developments in Kodak's bankruptcy.

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