Patent Law Practice Center

Kodak Closes $848 Million Financing Deal

Several weeks ago, Kodak announced that it closed its previously announced $848 million financing with members of the Steering Committee of the Second Lien Noteholders and other holders of Kodak’s Senior Secured Notes.

Under this new financing agreement, Kodak borrowed a total principal amount of approximately $473 million and converted $375 million in Senior Secured Notes into loans. The proceeds from this financing, together with proceeds from the much discussed sale of the Kodak imaging patent portfolio, will be used to repay the term loans outstanding under Kodak’s existing debtor-in-possession credit agreement, make an adequate protection payment to holders of the Senior Secured Notes, and support ongoing business activities.

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Take a Picture, It’ll Last Longer: The Role of Kodak’s Patent Portfolio in its Bankruptcy

As the progression of technology has proven before, film has gone the way of the VHS, tape cassette, and arguably the paper back novel. On January 19, 2012, Eastman Kodak filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in the Southern District of New York. Kodak made the transition from basing its company on film to digital, but it wasn’t enough. Citigroup will be lending the company $950 million in financing to maintain daily operations. After reviewing Kodak’s bankruptcy court documents, it has become clear that it is Kodak’s juicy patent portfolio that has not only burdened the company but will also hopefully sustain the company as it goes through bankruptcy.

What is interesting about Kodak’s patent portfolio is that one would assume having an estimated $3 billion dollars worth of intellectual property, including digital image capturing patents, would have saved the company from ever having to declare bankruptcy in the first place, especially considering Kodak was the first to invent the digital camera in 1975. As it turns out, the inability to enforce patent licensing rights and infringement damages cost the company more than their impressive patent portfolio could salvage. (more…)