Identifying Valuable Intellectual Property in Bankruptcy 

In virtually every commercial bankruptcy today, the question of intellectual property—identifying, valuing and securitizing it—has become of serious importance. In this article, we provide an overview of how to identify intellectual property and intangible assets (IP) and how to group those components into bundles of discreet value. In a separate article, we will deal in greater detail with the valuation and securitization, monetization, sale and orderly disposal of IP assets in bankruptcy.

Our point of view is business or financially based. We do not intend to deal with all of the legal issues surrounding IP in bankruptcy. However, it is useful to review some of the most important questions one faces when sorting through the issues surrounding technology, IT, patents, trademarks, brands and other intangibles, collectively grouped together as IP. Some of those key questions are the following:

• What kinds of IP does a company have?

• How best can the IP be identified?

• Does the intellectual property maintain its value when it is in bankruptcy?

• Who owns and controls that value?

• Do existing licenses have value?

• Who controls the destiny of those licenses?

• How do you value these assets in a liquidation scenario?

• What sort of liquidation discount is experienced when a patent, trademark, copyright or software license is sold in an orderly disposal?

• Is there a formula to establish the descending value of these assets in liquidation?

• How do you market and dispose of these assets most cost-effectively and time-effectively?

• Intellectually, the process is simple. However, the actual identification, collation, triage and valuation of these components of value can be time-consuming, and the process is best left to intellectual property professionals.

• A word of caution: Speed is of the essence, and these assets must be quickly and efficiently identified and packaged. It is important that key pieces of intellectual property not be skimmed off by secured lenders or others. The process cries out for the use of professionals experienced at the assembly, valuation and disposal of intellectual property. An IP professional will also work to speed the process and to ensure that all assets are identified and value-maximized.