When Minnesota businessman Tom Petters bought Polaroid in 2005, he had visions of reinventing the pioneer of instant photography and returning some tech luster to an iconic American brand nearing the scrap heap. Today, the snapshot of Polaroid's future is as blurred as ever. Petters sits behind bars, charged with swindling about $3 billion from investors including religious groups and charities. Though he has said all along that he will fight the charges, four of his cohorts have pleaded guilty. Nearly all of his fiefdom, save for Polaroid Corp., languishes in bankruptcy.
Polaroid, which operates out of the Petters Group Worldwide headquarters in Minnetonka, has hired New York investment bank Houlihan Lokey to explore options. Angry investors are circling, meanwhile, anxious to recover whatever money they can find amid the Petters debris. Polaroid is an obvious target.
It's unclear though, whether the aggrieved investors can squeeze anything from the former Fortune 500 company, which one industry analyst referred to as a "beaten vagabond."
Federal authorities say Petters lured investors by telling them he had arranged to buy high-end electronic merchandise for resale through big-box retailers. No such merchandise existed, according to government documents and the people who have pleaded guilty in the case.
That's one reason that investors and the government are concerned that shopworn Polaroid remain viable.
"It's important because it's something we can look at that we know is real. Given what's gone on there, it's hard to tell what's real and what's not," said Michael Terrien, a Chicago attorney representing the trustee for five investment funds run by Lancelot Investment Fund of Northbrook, Ill. The hedge fund sank $1.5 billion into Petters and has itself plunged into bankruptcy.
Polaroid is real in a branding-licensing sort of way. Though it shuttered some plants when it stopped making instant film last winter, it still employs about 300 people and had sales of more than $1 billion in the past 12 months.
But Polaroid is losing money like nearly all of Petters' myriad business entities, Petters' attorney said in court recently. Polaroid also faces an assortment of recent lawsuits, including patent infringement allegations and accusations that it breached long-standing distribution agreements in Latin America.