NEW YORK (Reuters) – Creditors of bankrupt Polaroid Corp filed a series of objections on Friday claiming a proposed deal to sell assets of the camera maker greatly undervalue the company and its trademarks.
Polaroid, which was bought out by Petters Group Worldwide for $426 million in 2005, is seeking to sell virtually all of its assets, including its brand name and trademarks, to an affiliate of Luxembourg-based private equity firm Genii Capital for $42 million, plus the assumption of certain liabilities.
Polaroid has sought to name PHC as the “stalking horse” or lead bidder at a bankruptcy auction to be held in March. The stalking horse bid is typically used in bankruptcy auctions to set a floor for the bidding.
Polaroid filed for bankruptcy in December in the wake of a fraud investigation involving its owner Tom Petters.
It has received four bids for the company, entered negotiations with two potential acquirers and decided that PHC was the highest and best offer, according to court papers.
The committee of unsecured creditors of Petters Group said in an objection on Friday that the bid meant valuable assets “are essentially being given away for free.”
It said the proposed bid procedures, which require bidders to submit bids for “substantially all” of the assets in one piece, limit the bidding field and that liquidation value, would be superior to the current proposal, as that would allow the trademarks to be sold separately.
“Based on its long 70-year history, Polaroid is one of the most respected and trusted brand names in the world,” the creditors said in court papers, noting that the Polaroid brand name has been used to sell eyewear, and other consumer products aside from the televisions, DVD players and instant and digital cameras the company is known for.
Sovereign Bancorp, another interested party in the case, said in a court filing on Monday that the mid-range value of the Polaroid trademarks is approximately $300 million.
Acorn Capital Group, which says it has a lien on Polaroid’s assets, also claimed in an objection that Polaroid holds inventory, artwork and accounts receivables worth almost $64 million and has potential legal claims against other entities that put its value well above the PHC bid.
The creditors are also objecting to a $1.2 million break-up fee PHC would get if it does not win the auction, according to court papers.
The Wall Street Journal reported earlier this week that private investor group Hilco Consumer Capital, a division of the Hilco liquidation company that invests in consumer brand names and trademarks, was interested in the Polaroid trademarks and brand name. A Hilco spokesman declined to comment on the group’s interest in Polaroid.
A Polaroid spokeswoman was not immediately available.
The case is In re: Polaroid Corp, U.S. Bankruptcy Court, District of Minnesota, No. 08-46617.
(Reporting by Emily Chasan; Editing by Gary Hill)