$2bn fraud blamed as Polaroid submits Chapter 11 filing

22 December 2008

Polaroid, the company that pioneered instant photography, has filed for Chapter 11 bankruptcy protection, citing an alleged $2 billion fraud at its parent firm, Petters Group Worldwide (PGW) for its problems.

According to its filing with a US bankruptcy court in Minnesota, the company's financial position has been "compromised" by the "apparent fraudulent acts" of PGW founder Thomas Petters and some of his associates.

Mr Petters is currently charged with multiple counts of fraud and money laundering after being arrested on suspicion of creaming off group money to pay for a lavish lifestyle. He is also accused of using bogus purchase orders to fraudulently secure investment from hedge funds.

PWG filed for bankruptcy in October after a court froze its assets. The company has unsecured claims of $213.5 million outstanding against Polaroid, which the camera firm disputes, Bloomberg noted.

In a statement, Polaroid said there are "ample cash reserves" to cover its Chapter 11 restructuring and it will continue operations while the process is carried out. The company plans to launch a number of new product lines next year.

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