Late one night last November, Doug Kelley sat in his family room in Bloomington, sifting through a stack of the day's legal work. Kelley is the court-appointed receiver in the Tom Petters case, a surrogate CEO running what's left of the jailed businessman's companies and squeezing out cash for the investors Petters allegedly bilked of $3.5 billion.
In the stack of legal papers was a bid for the assets of Polaroid, which Petters had bought four years earlier for $426 million and moved to Minnetonka. A small line item in the bid caught his eye: The Polaroid Art collection. $10 million.
"I said, 'Well, what's this?'" Kelley recalled in an interview.
Kelley had come upon Polaroid's historic collection of one-of-a-kind photography, a treasure ensnared in the Ponzi scheme authorities accuse Petters of running. Petters denies the charges and is preparing for a September trial. Meanwhile, the art collection is now all but orphaned by Polaroid's sale to a group of private equity investors who took nearly everything but the artwork.
The work is irreplaceable. Remember, this is Polaroid, the inventor of instant photography, which leaves no negatives for copies. Many pieces are signed, said Linda Benedict-Jones, curator of the Polaroid Collection from 1984 to 1989. New York auction house Sotheby's valued the collection at anywhere from $7.3 million to just north of $11 million, according to testimony in bankruptcy court.
"It's absolutely incredible," Kelley said.
And its fate is even less certain than Polaroid's.
The joint venture of Hilco Consumer Capital of Toronto and Gordon Brothers Brands in Boston, which won the company for $85.9 million in a St. Paul fire-sale auction last week, excluded the collection from its purchase. Patriarch Partners, a New York private equity firm, had submitted a higher bid that included the collection, but a St. Paul bankruptcy judge selected Hilco's bid as the best overall offer. The judge denied Patriarch's and another creditor's motions to stay the sale while they appeal.