Thursday, October 27, 2011
Apparently a group of creditors sent a letter to the Eastman Kodak board to remind them that they are required to get "fair value" for any assets they might sell, including the Kodak patent portfolio. In a sale of substantially all the assets of a firm its necessary for a board to ensure that it receives "reasonably equivalent value" for the assets sold. This is, in part, to prevent sellers from using the asset sale as a fraudulent conveyance. The fear from creditors of Kodak is that Kodak might sell its patent portfolio and then file for bankruptcy protection, leaving creditors to take a hit. The creditors are looking to put maximum pressure on Kodak's board before a sale to try to incentivize the Kodak board to get the highest price possible for those assets.