Dec 18, 2008 9:50 pm US/Central
Polaroid Files For Bankruptcy, Citing Petters Case
MINNEAPOLIS (AP) ―
Polaroid Corp. and its subsidiaries filed for Chapter 11 bankruptcy protection on Thursday, saying that allegations of fraud at its parent company are to blame.
In a statement, Massachusetts-based Polaroid said its ongoing financial restructuring process and Thursday's filing in U.S. Bankruptcy Court in Minnesota are the result of the federal investigation into its parent, Petters Group Worldwide.
Petters Group has owned Polaroid since 2005.
Authorities allege Petters Group founder, Tom Petters, orchestrated a scheme that bilked investors out of $3 billion since the mid-1990s. Petters is in custody and has maintained his innocence. But several of his top executives have pleaded guilty to their roles in the scheme.
Minnetonka-based Petters Group is under the control of a court-appointed receiver.
Polaroid, best known for inventing instant photography, said in a statement that the company and its officers are not part of the fraud investigation. However, the allegations "have compromised the financial condition of Polaroid."
Polaroid said Thursday's move will not impact day-to-day operations for employees, customers, retailers and suppliers. The company also said it has ample cash reserves to finance its reorganization under Chapter 11.
"We expect to continue our operations as normal during the reorganization and are planning for new product launches in 2009," said Mary L. Jeffries, Polaroid chief executive officer.
Polaroid Corp.'s largest unsecured creditor is Petters Capital, LLC, with a claim of nearly $184 million.
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Items federal agents seized at Tom Petters' Wayzata home in the fall of
2008 included $13,000 in cash, numerous credit cards, a .22 caliber
revolver and 11 high-end watches, including four Rolexes.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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