Judge refuses to delay sale of Polaroid

James Rosenbaum said the court record shows neither a grossly inadequate price nor taint of fraud.

By DAN BROWNING, Star Tribune

Last update: April 30, 2009 - 8:25 PM

The spurned bidder for Polaroid Corp. lost another attempt to block the sale to a rival on Thursday when a federal judge in Minneapolis found that it had little chance of succeeding with its efforts to appeal.

U.S. District Judge James Rosenbaum denied a request by the investment firm Patriarch Partners to issue a temporary retraining order on the sale of Polaroid out of bankruptcy to a joint venture between Hilco Consumer Capital and Gordon Brothers Brands.

Two weeks ago, bankruptcy Judge Gregroy Kishel awarded the company to Hilco, which bid $85.9 million for the photo company.

Rosenbaum noted in his order that bankruptcy courts "have wide discretion in structuring sales of estate assets" and that district judges like himself can overrule them only for an abuse of that discretion.

"To the extent Patriarch asks this court to set aside the sale order, it must show the purchase price is 'grossly inadequate,' or that the sale proceeding was tainted by fraud," he wrote. "Patriarch appears quite unlikely to make the showing needed to set aside the sale order. The court's own review of the transcripts provided reveals no hint of either possibility. Indeed, where the offers differ by barely half of 1 percent, a suggestion of inadequate price would border on the frivolous."

Rosenbaum agreed that Patriarch might be harmed by his refusal to grant a temporary restraining order pending the appeal. But he also concluded that "a stay will cause substantial harm to other interested parties. The debtors are bleeding cash," he noted. "Even a brief delay appears to be a lose-lose proposition, making it harder for debtors to sell the company, and also harder for whoever buys the company to market Polaroid products."

Minnesota businessman Tom Petters bought Polaroid out of bankruptcy in 2005 for $426 million. Petters, 51, of Wayzata, was indicted last fall on fraud, conspiracy and money laundering charges in connection with a what authorities described as a $3.5 billion Ponzi scheme he is alleged to have orchestrated. A court-appointed receiver put Polaroid into bankruptcy in December and sought bidders for the company. Petters, who remains in federal custody, is fighting the charges against him and is scheduled for trial in September.

Dan Browning • 612-673-4493

Recent Local + Metro stories

California investigates whether churches were cheated by leasing companies - April 30, 2009

California investigates whether churches were cheated by leasing companies - California is investigating several companies suspected of bilking churches nationwide of hundreds of thousands of dollars through fraudulent computer leasing schemes, authorities said Friday. More