Polaroid filed for Chapter 11 bankruptcy protection on Friday, but no, it's not because almost nobody wants its self-developing film anymore.
Instead, the company said that its filing, which permits the company to undertake a financial restructuring, is related to a fraud matter involving Petters Group Worldwide, owner of Polaroid since 2005.
"Polaroid's financial condition was compromised by the apparent fraudulent acts perpetrated by the founder of Petters Group Worldwide, Polaroid's parent company, and certain of his associates," the Minnetonka, Minn.-based company said in a statement Friday. "The Chapter 11 process will provide Polaroid with the opportunity to restructure its balance sheet and reduce its debt to ensure the future health and sustainability of the business."
The company has "ample cash reserves" to finance the restructuring, with no new financing needed, and Chief Executive Mary L. Jeffries said operations will continue. The company's once-iconic film and film-camera business has largely fallen by the wayside, but it still sells flat-panel TVs, printers, digital cameras, and other products.
"We expect to continue our operations as normal during the reorganization and are planning for new product launches in 2009," Jeffries said. "Our operations are strong and during this process Polaroid will ship products to our retail partners, work with our suppliers and contract manufacturers to fulfill retailer demand, honor customer warranties, and employees are expected to receive their regular paychecks without interruption."
Tom Petters and four others were charged in October with participation in what authorities said was Ponzi scheme involving investment fraud, according to the Star Tribune of Minneapolis and St.Paul.
With a recession under way, it's a tough time to be getting a business back on track. But the company can take some consolation that others also are suffering.
Canon, the top digital camera maker, said it will delay construction of a new digital camera factory in Nagasaki, Japan, because of slowing consumer demand, Reuters reported Thursday. In July, the company had said it planned to start building the plant in January and begin producing cameras there in December 2009.