Polaroid files for Chapter 11 bankruptcy protection

Friday, October 12th 2001, 12:00 am
By: News On 6

BOSTON (AP) _ Polaroid Corp., known to generations of consumers for its instant cameras and film but buried beneath a mountain of debt, filed for Chapter 11 bankruptcy protection Friday.

The widely expected move comes three months after Polaroid said it would miss payments to bondholders and explore strategic options _ including a sale of the company _ as it negotiated with creditors.

No buyer stepped forward and business slowed further after the Sept. 11 terrorist attacks, forcing the company into reorganization.

Polaroid, founded by Edwin Land in 1937, has struggled to adapt to new digital technology as its core instant film business has slumped.

The Cambridge-based company could be sold off in its entirety or essentially stripped for parts under the supervision of a bankruptcy court.

A Chapter 11 reorganization would make Polaroid and its parts more attractive to potential buyers, analysts said. Buyers could acquire equity for free and possibly get a discount on Polaroid debt if the purchase came out of bankruptcy proceedings.

Polaroid has been trying to restructure $950 million in debt, and lost $109.9 million in the quarter ending July 2.

It has laid off at least 2,950 employees _ 35 percent of its work force _ and been in negotiations with bondholders since missing interest payments in July.

But it still has valuable assets, including a well-known name and new printing technology, called Opal and Onyx, which is expected to debut next year. Analysts have said they were impressed with the technology, though they doubted Polaroid could develop it quickly enough to save the company from bankruptcy.

Trading in Polaroid shares, which had reached $60 per share in 1997, has been halted since early Wednesday at 28 cents per share on the New York Stock Exchange.

Polaroid has obtained a commitment of $50 million from a bank group led by J.P. Morgan Chase & Co. to continue operating during the restructuring.

In a statement, Polaroid said it would ``accelerate and intensify its exploration of a possible sale of all or parts of the company.''

Employees will continue to be paid and their benefits will be unchanged, the company said.

Before Friday's filing in U.S. Bankruptcy Court in Delaware, Polaroid spokesman Skip Colcord acknowledged that business has slowed since the World Trade Center attacks.

Last month, the company told employees its pension plan had only enough to pay 90 percent of all benefits accrued by employees. It has been trying to unload real estate in the Boston area and in May sold its office park in Waltham for $70 million.

Polaroid isn't the only photographic company hit hard by the economic slowdown. Eastman Kodak Co. recently cut its third-quarter earnings outlook by 38 percent and is also cutting an unspecified number of jobs.