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Question: How many federal judges does it take to oversee the sale of Polaroid Corp?
Answer: Four, and counting.
As creditors and bidders argue over the fate of the photo icon, Polaroid is running out of cash as fast as lawyers are running up bills.
How did it come to this?
U.S. District Judge Ann Montgomery put Polaroid into receivership last fall after its owner, Tom Petters, was indicted on charges he ran a $3.5 billion Ponzi scheme. Receiver Doug Kelley filed for Chapter 11 bankruptcy protection and sought bidders for the company.
New York investment firm Patriarch Partners, acting through an entity called Lithograph Legends, initially appeared to win an auction. But bankruptcy Judge Gregory Kishel reopened bidding and ultimately awarded the company on April 17 to another bidder, a joint venture of Hilco Consumer Capital of Toronto and Boston-based Gordon Brothers Brands, whose $85.9 million offer had the support of Polaroid's creditors.
Lithograph Legends filed an emergency request to block the sale.
But U.S. District Judge James Rosenbaum indicated to the company's lawyers Monday that they had a steep hill to climb. When New York attorney Hillary Richard told Rosenbaum that significant legal issues were at stake, he interrupted her.
"I don't know why they're significant," Rosenbaum said. "We're talking about two offers that differ by less than one-half of one percent," he said. "There's nothing here! Now, tell me why I'm wrong."
Rosenbaum has not yet ruled. Meanwhile, one of Petters' creditors filed an emergency motion Tuesday with another federal judge, John Tunheim, that also seeks to block the sale. Acorn Capital Group said it's owed $281 million and has first priority liens against Polaroid's U.S. inventory, accounts and North American trademarks.
Acorn complained that Kishel had deprived Acorn of any "meaningful opportunity" to present evidence or arguments objecting to the sale.
Terrence Fleming, an attorney representing Polaroid, told Rosenbaum this week he just wants the sale to close soon.
"The real concern we have as the debtor is this deal going away -- any deal," Fleming said. "The cash position is almost desperate."
Dan Browning • 612-673-4493