Victim of technology, Polaroid to consider continuing

By

Posted 8:24AM on Thursday, February 14, 2002

CAMBRIDGE, Mass. - Polaroid Corp. said it could emerge from bankruptcy protection as a smaller stand-alone company. The Cambridge-based photo firm agreed to consider the idea to ease concerns of creditors Wednesday in U.S. Bankruptcy Court in Wilmington, Del., where Judge Peter Walsh gave Polaroid 75 more days to file a reorganization plan. Polaroid, which began seeking a buyer last summer after defaulting on bonds, had been criticized by creditors for trying to arrange a quick sale of all its assets. Creditors said that would yield less value. Creditors objected to the extension, but dropped the complaints after Polaroid agreed to tell the judge it will consider it will consider reorganizing as a smaller company. "Over time, the company has come around to the perspective that there may be a viable alternative to simply selling itself," Fred Hodara, a lawyer for the official committee of Polaroid's unsecured creditors, told the Boston Herald. Creditors say they'd get more of what they're owed through a sale of noncore assets, and a reorganization of the core instant-photography business. A quick sale of assets would only help "secured creditors," they argued. Hodara said several companies have shown interest in buying Polaroid and operating it as a small, stand-alone business. He said it would require capital, which possibly could come from a joint venture partner or the creditors themselves. "What we objected to was a fire sale," he said. "We objected to the idea that there was some desperation that required the same of this company urgently." The extension gives Polaroid until April 29 to file the reorganization plan. Polaroid has said if that deadline is met, it wants until June 24 to obtain acceptance of the plan before third parties can file competing plans. Last month, the bankruptcy court approved the creation of a committee of retirees to look into whether Polaroid acted properly by terminating benefits. Polaroid filed for Chapter 11 bankruptcy protection Oct. 11, 2001, and told retirees it could no longer cover its contribution to their health benefits. It also warned the pension fund may be underfunded, though for now it is making payments.