In 'Kodak' bankruptcy, expert's nonchalant attitude worsens damage to credibility

In re Eastman Kodak Company, 2013 Bankr. LEXIS 3325 (Aug. 15, 2013)

Following Kodak's petition for Chapter 11 bankruptcy,  a group of shareholders demanded an equity committee to represent its interests. To bolster its argument that the company's reorganization plan understated its reorganization value by as much as $2 billion, the group presented two expert opinions: one on the alleged undisclosed value of the company's patent portfolio and one on the value of the Kodak brand. Neither testimony held up under Daubert, the Bankruptcy Court determined.

But what particularly piqued the court was the attitude the patent expert displayed. In a three-page letter to the shareholders, he stated he believed “the intrinsic value of Kodak’s US patent portfolio to be $1.6 billion to $2.5 billion.” He admitted that this assessment did not take into account the most recent financial information and asset sales that directly bore on Kodak's patent portfolio. He also said that his firm would have had to spend some 5,000 hours to do a thorough analysis of the portfolio, which it did not do. But rather than decline to opine until he was good and ready, he testified anyway, the court pointed out. As a result, his opinion rested on assumptions “that have no validity whatsoever." While his statements may have “encouraged” shareholders to believe “that Kodak could not conceivably have fallen as far and as fast as it did,” they were not “useful or admissible” as to the estate’s current value.