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December 19, 2008 2:51 PM

Polaroid Files for Bankruptcy (Again)

Posted by Zach Lowe

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Polaroid Corp. is back in bankruptcy for the second time this decade, and they are blaming their financial troubles this time not on the digital camera revolution (that's old hat now) but on the late September arrest of their parent company's owner, Tom Petters, on massive fraud charges, according to Bloomberg

The interesting question now is: Which firm is going to get the bankruptcy work for the Minnetonka, Minn.-based company? In 2001, when the company first filed, the honor went to Skadden, Arps, Slate, Meagher & Flom, but Skadden isn't on this file (yet, at least). Kirkland & Ellis, the other bankruptcy giant with midwestern ties, is probably out, since they are listed among Polaroid's top 30 creditors (the company owes Kirkland $159,000). That has so far left the work to Lindquist & Vennum, a firm with a major presence in Minnesota, where Polaroid filed this time; the company filed in Delaware in 2001. 

The firm had to be approved by Douglas A. Kelley, the name partner at the three-lawyer Minneapolis firm Kelley & Wolter who's acting as receiver for Petters and the Petters Group, Polaroid's parent company. Petters has been in jail with his assets frozen since his arrest in September on charges of scamming investors and hedge funds by creating bogus purchase orders designed to drum up investment, according to Bloomberg and the Minneapolis/St. Paul Business Journal

Several of Petters' companies, including Petters Group Worldwide, Petters Company, Inc., and Sun Country Airlines, have also filed for bankruptcy protection since Petters' arrest. The same Lindquist partner (James Lodoen) is representing Petters Group Worldwide and Petters Company in bankruptcy proceedings. But Petters Company (and another Petters-controlled entity, Petters Capital LLC) are listed as the top two creditors in the Polaroid filing, with combined debts of about $213 million. Polaroid is disputing those debts.

Lodoen declined to comment on his representation of all the companies, but did say Lindquist and Polaroid are not planning on bringing in a national firm to help in the proceedings. Richard Cieri, co-chair of Kirkland's bankruptcy department, says it's common for the same lawyer or firm representing a bankrupt parent company to also represent any subsidiaries of that company that also file for bankruptcy.

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