Eastman Kodak Co's proposed $525 million sale of its digital imaging patents to Intellectual Ventures and RPX Corp got a bankruptcy judge's approval on Friday, bringing the photography innovator a step closer to exiting Chapter 11.
The price is a fraction of the more than $2 billion which Kodak had hoped to fetch for the patents when it filed for bankruptcy in January 2012. However, it allows the company to proceed with a plan to secure $830 million in financing and exit bankruptcy in the first half of this year.
Judge Allan Gropper gave his green light at a hearing in U.S. Bankruptcy Court in Manhattan.
"We're disappointed in the price, but we're moving the case forward," Gropper said.
Intellectual Ventures and RPX lead a consortium of some of the world's biggest technology companies, including Adobe Systems Inc, Amazon.com Inc, Apple Inc and Fujifilm Holdings Corp.
The deal, announced in December, allows for the licensing of patents, settlement of patent-related legal claims, and the assumption of a cross-licensing agreement between Kodak and Fuji. Kodak said it was pleased with the court's approval.
"The monetization of non-core IP assets achieves one of Kodak's key restructuring objectives while positioning its commercial imaging business for further growth and success," the company said in a statement.
Kodak's patents hit the market as intellectual property values soared and technology companies began plowing money into patent-related litigation.
For example, Nortel Networks Corp in 2011 sold 6,000 wireless patents in a bankruptcy auction for $4.5 billion, and Google Inc spent $12.5 billion last year for patent-rich Motorola Mobility.
But Kodak's patent auction dragged on beyond the initial expectation that it would be wrapped up in August and never generated nearly as high a price.
Kodak, which traces its roots to the 19th century, invented the handheld camera but was unable to shift successfully into digital imaging. It will likely be a different company when it exits bankruptcy, leaving the consumer business and focusing instead on providing products and services to the commercial imaging market.
The Kodak bankruptcy case is In Re: Eastman Kodak Co. et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.