A bankruptcy judge refused to dismiss Polaroid Corp.’s Chapter 11 case after a shareholder claimed the instant photography company submitted misleading financial information.
Shareholder Stephen Morgan had asked the court to dismiss the case, saying financial information submitted by Polaroid understated the value of the company.
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Polaroid sought bankruptcy protection in October amid mounting debt and declining instant-film sales. In April, the company agreed to sell its assets to investors led by a Bank One Corp. unit for $265 million.
“It was pubic knowledge that before the company filed, the company was headed in this direction,” said U.S. Bankruptcy Judge Peter Walsh at a hearing. “If I were to dismiss, it’s pretty clear we’d be looking at a liquidation scenario.”
During the hearing, Cambridge, Mass.-based Polaroid also announced that it had settled a motion by a committee representing retired company employees that had asked it to reinstate its health plan. The company won’t give the group health coverage, although it will give them $750,000 to pay costs
associated with the case. Polaroid originally offered $80,000.
In exchange, the retirees agreed not to contest Polaroid’s sale. The settlement must be approved by Walsh.
Bloomberg News
