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Judge Rules Polaroid Sale May Proceed
source: Star Tribune, Minneapolis

Mar. 27--The auction-like sale of Polaroid Corp. can proceed as scheduled next week after U.S. Bankruptcy Judge Gregory Kishel ruled Thursday that it's too late for the company's creditors to question company executives about the pending transaction and other financial matters.

Kishel approved a motion by Polaroid's attorneys to quash recent subpoenas for the depositions of CEO Mary Jeffries and former corporate counsel David Baer, noting that lenders Acorn Capital Group and Ritchie Capital Management have had more than two months to initiate discovery proceedings.

"Time is money," Kishel said, rejecting the notion that the sale could be delayed. "There is an ongoing drain on resources that dictates that the sale be done quickly."

Polaroid is part of the corporate estate of Wayzata businessman Tom Petters and was placed in Chapter 11 bankruptcy along with other Petters business entities after he was charged in federal court with running a giant Ponzi scheme. Petters is fighting the charges.

U.S. Magistrate Judge Arthur Boylan issued an order in the criminal case Thursday denying a request by Petters' attorneys to force the government to identify any witnesses it may call against Petters who may be in the federal witness protection program, except under certain circumstances delineated in case law.

Petters previously asserted that former business associate Larry Reynolds -- who has pleaded guilty in the case -- is a protected government witness. Petters' lawyers wanted access to that information in an attempt to impeach any testimony he might provide.

Boylan also denied Petters' motion to dismiss the charges against him on grounds that federal prosecutors were "meddling" in his defense by seeking to limit the amount of fees available to pay his attorneys so the money could be used to compensate victims if he's convicted.

Boylan denied Petters' request for generally less restrictive jail conditions, but he did order that his hand and leg shackles be removed during meetings with his attorneys. Boylan said other pending motions related to searches of Petters' home and business, and his effort to quash his comments to federal investigators, would be addressed in his written report and recommendations to Judge Richard Kyle.