Polaroid bankruptcy should make company stronger, says receiver

Bankruptcy will make Polaroid stronger. That’s what the company’s court-appointed receiver Doug Kelley tells the Star Tribune after the company filed for Chapter 11 bankruptcy on Thursday.

Criminal charges against owner Tom Petters and a tight credit market have hurt Polariod’s ability to transition from instant film into digital technologies, he said. In a statement, Polaroid said the bankruptcy and financial restructuring will not affect the day-to-day operations for employees, customers, retailers and suppliers.

“Our operations are strong,” CEO Mary Jeffries said, “and during this process Polaroid will ship products to our retail partners, work with our suppliers and contract manufacturers to fulfill retailer demand, honor customer warranties and employees are expected to receive their regular paychecks without interruption.”

She added that the company plans new product launches in 2009.

It’s the second time in a decade that Polaroid has filed for bankruptcy, the Pioneer Press reports. Minnetonka-based Petters Group Worldwide bought the company in 2005.

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Comments (2)

  1. Submitted by Kevin Lamson on 12/21/2008 - 12:42 pm.

    As an assistant U.S. attorney Doug Kelley did an acceptable job prosecuting criminals. He then he became a decent criminal defense attorney. However to my knowledge Mr. Kelley has never acted as a receiver or represented anyone in any business bankruptcy. Thus his statements regarding Polaroid’s recent Bankruptcy are from someone who really doesn’t know what he is talking about. His claim that Polaroid’s Bankruptcy “allows them to get stronger” is, at best, naive.

    Filing Chapter 11 isn’t some corporate power pill which makes a company stronger. In fact very few companies survive a Chapter 11. The few companies that manage to successfully exit Chapter 11 under a plan of reorganization usually have arranged for debtor in possession financing, which is currently a bit difficult to find, and also have a pre-packaged plan of reorganization, which was not submitted in this case. Contrary to Mr. Kelley’s asserton Polaroid is NOT any “stronger” as result of filing Chapter 11.

    Most Chapter 11 bankruptcies result in no distribution to shareholders and little or no distribution to creditors. Most of the money in Chapter 11’s finds its was into the pockets of the so-called Bankruptcy Professionals to pay their huge fees. Legal fees for Bankruptcy Professionals in Minneapolis run between $350.00 and $700.00 per hour. Accountants and Bankruptcy Consultants run $150.00 to $400.00 per hour. Now you have to add figure in the additional cost of paying Kelley & Company for acting as receivers for Tom Petters and the companies he used as props for his Ponzi scheme. None of these entities appear to make any moey. They are merely props used by a con man Petters to feign financial success.

    Polaroid previsously filed bankruptcy in 2002. After the sale of its name and selected assets Poloroid’s shareholders were left holding an empty bag and millions owed to creditors.

    In 2005, Tom Petter’s bought the already financially floundering new Poloroid company for a reported $426,000,000.00 from a company that had purcahsed the assets from Poloroiad’s first bankruptcy. Polaroid has never operated at a profit since Tom Petter’s purchassed in in May of 2005.

    Polaroid was able to fund its continuing losses through credit arranged by Tom Petters. Just as he did for Sun Country Airlines. However after Tom Petter’s was exposed as a Con-Man running a Ponzi Scheme, both Polaroid and Sun Country were left high an dry and could not find a prudent lender who was willing to lend money to a company owned and/or controlled by Mr. Petters.

    My guess is that, without debtor in possession financing in place, and/or a pre-packaged Chapter 11 plan of reorganization Ms. Jeffries and the bankruptcy professionals will run Poloroid out of cash by paying themselves very soon, and Poloroid will be forced to sell its remaining assets, just as it did in its 2002 bankrutpcy. Resulting in no distribution of money being made to the current shareholders, including Tom Petters, and little or nothing being distributed to Polaroid’s creditors, including Tom Petters In other words no money from the Polaroid’s Bankruptcy estate will be ever be distributed to Tom Petter’s Ponzi scheme victims. But only time will tell.

  2. Submitted by Kevin Lamson on 12/21/2008 - 01:46 pm.

    Contrary to many news reports the Polaroid corporation that recently filed for Chapter 11 is not the Polaroid corporation that dates back to 1937. Poloroid Corporation that filed Chapter 11, in 2001, rather than reorganize and emerge from Chapter 11, sold its name and assets to One Equity Partners (OEP) in 2002 for a controversial price of $220,000,000. OEP is private equity arm of Chicago banking giant Bank One Corp. OEP used $136.8 million in Polaroid’s own funds to help it finance its purchase of the company.

    OEP subsequently unloaded this same business and assets to Tom Petters for $426,000,000 in May of 2005. Petter’s used this new Polaroid corporation as one of his many props in his long running Ponzi scheme.

    As a result of Tom Petter’s purchase in May of 2005, from OEP, OEP the top two executives pocketed in excess of $20 Million in bonuses for two years at the helm, while Polaroid’s 6,000 retirees each received a whopping $47.00, in place of lifetime healthcare and life insurance they were owed as retirees.

    The 2001 Polaroid Chapter 11 has often been described by Polaroid shareholders, long time employees, retirees and creditors as “The Rape of Polaroid”. Will the 2008, Chapter 11 of the 5 year old Polaroid corporation be referred to as the “Second Rape of Polaroid”. It sure is starting out to look like it.

    Here are some interesting articles regarding what happened to the original and venerable Polaroid Corporation, its shareholders, employees and retirees as a result of its 2001 Chapter 11.




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