Bankruptcy Setbacks Offer a Chance for Strategic Success in IP

The Bankruptcy Code provides a framework for distressed businesses to liquidate or reorganize, but bankruptcy proceedings fail to adequately recognize the centrality of intellectual property to many businesses.

IP portfolios are often overlooked among a company’s assets. Once a company’s IP is swept into a bankruptcy estate and sold at auction, it’s likely to be undervalued. Intangible property, including IP, is often valued at $0, with sales dictated by what the market is willing to pay–often far less than the real value.

Companies should evaluate ways to exploit, license, or monetize IP portfolios before initiating bankruptcy proceedings. When they fail ...