Hold on -- the fight over the remains of Polaroid Corp. ain't over.
The head of the New York private equity firm that lost Thursday's auction for Minnetonka-based Polaroid, despite having the highest bid, plans to file a restraining order Monday to stop the sale. Lynn Tilton, the blunt-talking head of Patriarch Partners in New York, took her complaints about the winding auction to the national airwaves Friday, with an appearance on CNBC's Power Lunch Friday.
"Not once, but twice we've had the highest bid," Tilton said on the show. "I wasn't liked. I don't know ... I've been the last man -- or woman -- standing twice, and twice the judge has overruled the highest bid."
Tilton, who had the support of Polaroid workers, technically won a 3 1/2-hour auction for Polaroid in a St. Paul bankruptcy court Thursday with her high bid of $86.4 million. But U.S. Bankruptcy Judge Gregory Kishel decided a joint venture of Hilco Consumer Capital of Toronto and Boston-based Gordon Brothers Brands had the best bid at $85.9 million, because they had the support of Polaroid's creditors.
With her mane of bleached hair and spike heels, the chopper-commuting Tilton stood out in the otherwise gray-suit landscape of a Minnesota bankruptcy court. Her lapses into sailor's mouth didn't always play well.
Besides being good sign-of-the-times bankruptcy theater, the dispute over what's left of the once-great instant photo pioneer matters greatly to the company's 70 employees, to creditors and the long list of people to whom Tom Petters owes money. Petters, sitting in Sherburne County jail on charges of running one of the largest Ponzi schemes in U.S. history, bought Polaroid in 2005 for $426 million, and it is one of the few entities he owns that appears to have much real value. Petters, 51, of Wayzata, has denied the charges and is preparing for a trial.
Tilton, whose firm manages more than $6 billion in assets and has a stake in more than 70 companies, including Howard Hughes' former helicopter business, has said that under her ownership Polaroid's headquarters and workforce would stay put. The joint venture that won will likely shift Polaroid online as it pursues a pure branding strategy -- though the group took pains Friday to say nothing has yet been decided.
Jamie Salter, head of Hilco Consumer Capital, said Friday the new company would be headquartered in New York City. He said his group's bid didn't include the Minnetonka lease and that he expected the estate would eventually shut down Polaroid's headquarters.
"We'll be offering jobs to certain employees and if they're interested in moving or commuting, that will be their decision," Salter said.
Ken Frieze, principal and managing director of Gordon Brothers Group in Boston, said he wasn't too worried about the court changing its mind.
"There's a strong push for all the parties involved to move forward with this transaction," Frieze said.
Hilco and Gordon Brothers are known as liquidators, but Frieze took umbrage at the term, stressing that their companies revitalize and grow distressed brands. The company plans to license the Polaroid brand, much as it has done with other distressed companies it has purchased, including Bombay Brands, Linens 'N Things and Sharper Image. "A number of people will have to be employed throughout the world, from Minneapolis to China to Europe. None of those decisions have been made yet."
The number of such bankruptcy fire sales has increased with the tough economy and the new bankruptcy rules that went into force in 2005, said Mark Kalla, a Minneapolis attorney for the Hilco-Gordon Brothers joint venture. The new bankruptcy rules made reorganizing a company in Chapter 11 bankruptcy harder by, for instance, requiring debtors to pay their vendors more money, and to do it more quickly, Kalla said.
There's certainly more distress for investors to pick from these days, but cash is more scarce and there's fewer buyers. Polaroid happened to be a particularly strong brand.
"It's got a name that's up there with Nike and McDonalds," Kalla said. "People recognize it."
Jennifer Bjorhus • 612-673-4683