Minneapolis: 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, Concord Massachusetts-based Polaroid said its ongoing financial restructuring process and Thursday’s filing in US Bankruptcy Court in Minnesota are the result of the federal investigation into its parent, Petters Group Worldwide. Petters Group has owned Polaroid since 2005.
Petters Group and its venture capital unit Petters Co. Inc. filed for Chapter 11 bankruptcy protection in October following a federal investigation into a $3 billion fraud scheme that authorities say was run by the company’s founder, Tom Petters
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.
Petters Group has investments in dozens of companies. Its holdings include Polaroid and Sun Country Airlines, which also made a separate Chapter 11 bankruptcy filing in October after it couldn’t turn to its parent company for a short-term loan because of the federal investigation.
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.