The pending sale of Polaroid Corp., one of the remaining assets with value in the organization of Wayzata businessman Tom Petters, might hit a speed bump today.
Attorneys for two of Polaroid's lenders claim the sale, set for next week, will benefit unspecified insiders, and they want to question the company's top executive and its former general counsel about their knowledge of the sale.
The creditors subpoenaed CEO Mary Jefferies and David Baer, the former general counsel of Petters Group Worldwide (PGW), served last week for depositions.
But according to a response filed late last week, the bankruptcy attorneys for Polaroid will argue in U.S. Bankruptcy Court in St. Paul today that those subpoenas should be quashed. They say the subpoenas were not filed in a timely fashion and note that a previous attempt to conduct pretrial discovery on the sale was rejected by Bankruptcy Judge Gregory Kishel, who gave his approval for the sale in a ruling last month.
"Polaroid employees and certainly Jefferies are spending all of their energies on maximizing the value of Polaroid," attorneys for the company wrote. "It seems diverting attention from the main task at hand is exactly what Ritchie [Capital Management] and Acorn [Capital Group] intended to do."
Depositions of Jefferies and Baer had been set for Monday and Tuesday of this week. Neither attended because personal attorneys for each had scheduling conflicts, according to court documents.
Bids for Polaroid are due on Monday. The opening, or "stalking horse" bid, is $42 million from Genii Capital, a Luxembourg-based private equity firm that is affiliated with PHC Acquisitions, a Delaware firm.
"Ritchie has reason to believe that the proposed sale of Polaroid to Genii is an insider transaction that will benefit Jefferies, PGW and perhaps others and thus is not a good faith, arms-length transaction," attorneys for Ritchie said in documents filed Wednesday. The attorneys asked that the sale be delayed until the depositions could be conducted.
Acorn's lawyers said they needed to take depositions from Jefferies, Baer and even Petters -- who is in federal custody pending trial on charges that he bilked $3.5 billion from investors in a Ponzi scheme -- because each of them was involved in the financing discussions with Acorn.
Both Ritchie and Acorn contend they are secured lenders of Polaroid and should be paid from the proceeds of the sale rather than have those proceeds pooled with other Petters assets to be distributed to all investors and lenders at a later date, or possibly disbursed through a restitution order.
Acorn says its lien is more than $281 million. Ritchie says it invested about $270 million.
Both claims have been disputed by Polaroid and by Doug Kelley, court-appointed receiver and bankruptcy trustee who is administering the corporate and personal assets of Petters and several others who were affiliated with the alleged scheme, which unraveled last fall.
Earlier this week, Ritchie filed a motion in U.S. District Court in Minneapolis seeking to lift the freeze on PGW's assets and have Kelley removed as receiver. Ritchie claims PGW, a Petters holding company, was not involved with the alleged investment fraud.
David Phelps • 612-673-7269