Polaroid Corporation is an international consumer electronics and eyewear company, originally founded in 1937 by Edwin H. Land. It is most famous for its instant film cameras, which reached the market in 1948, and continued to be the company's flagship product line until the February 2008 decision to cease all production in favor of digital photography products.[1] The company's original dominant market was in polarized sunglasses, an outgrowth of Land's self-guided research in polarization after leaving Harvard University after his freshman year—he later returned to Harvard to continue his research.
After Polaroid defeated Kodak in a patent battle, Kodak left the instant camera business on January 9, 1986.
Polaroid developed an instant movie system, Polavision, based on the Dufaycolor process. The product arrived on the market when videotape based systems were rapidly gaining popularity. As a result, Polavision was unsuccessful and most of the manufactured product was sold off as a job lot at immense cost to the company. Its underlying technology was later improved for use in the Polachrome instant slide film system.
The company also was one of the early manufacturers of digital cameras, with the PDC-2000 in 1996;[2] however, they failed to capture a large market share in that segment.
On October 11, 2001, Polaroid Corporation filed for Chapter 11 bankruptcy protection. Almost all the company's assets (including the "Polaroid" name itself) were sold to a subsidiary of Bank One. They went on to form a new company, which also operates under the name "Polaroid Corporation".[3] It stopped making Polaroid cameras in 2007 and stopped selling Polaroid film after 2009, to the consternation of some users.[4][5]
The renamed "old" Polaroid now exists solely as an administrative shell.[6] Its bankruptcy was widely believed to be the result of the failure of its senior management to anticipate the effect of digital cameras on its film business.
On December 18, 2008, the post-reorganization Polaroid Corp. filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the District of Minnesota. The bankruptcy filing came shortly after the criminal investigation of its parent company, Petters Group Worldwide, and the parent company founder, Tom Petters.[7]
On January 5, 2010, Polaroid partnered with Lady Gaga, appointing her as Creative Director for the company. A press release stated that she would be the "new face" of Polaroid.
The photographic equipment maker, which filed for Chapter 11 protection on Oct. 12, will ask the U.S. Bankruptcy Court in Wilmington, Del., to approve its employee retention plan at an April 5 hearing, Polaroid spokesman Skip Colcord said.
Saddled with $950 million in debt, Polaroid has shed about 4,200 employees since December, partly through planned restructuring. But much of its top talent has chosen to leave as the firm, best known for its instant film and cameras, has struggled to drum up a restructuring plan while so far unsuccessfully finding a buyer for all or part of the company.
In December, Polaroid said it planned to reduce the employee headcount from 8,865 to 5,500 by June. As of Tuesday, the firm employed 4,700, exceeding the targeted reduction by roughly three months.
"We've lost a lot of people with the skills necessary to get us through Chapter 11," Colcord said. "We need to create incentives to retain those people."
Colcord declined to discuss details of the plan, but said it would exclude Polaroid CEO Gary DiCamillo.
Meanwhile, the company expects to file its reorganization plan by the court-imposed April 29 deadline. Colcord could not say Tuesday whether that included a sale of the entire company or certain divisions.
One analyst, who asked not to be identified, said Polaroid is having trouble finding a buyer because few are willing to pay for the company's instant film assets, since the true cost of cannibalizing it from digital technology remains unclear, and that others are reluctant to take on the debt.
Film sales, which had been lagging last summer, plunged about 5 or 6 percent after the Sept. 11 terrorist attacks, but have since recovered a bit, the analyst said.
Polaroid received a $50 million debtor-in-possession financing as part of its October bankruptcy filing to provide additional liquidity and capital for operations.
The Cambridge, Mass.-based company filed for bankruptcy after struggling to pay off its nearly $1 billion in debt, part of which was coming due, while losing market share and sales to rivals Eastman Kodak, Hewlett-Packard, Canon and others, which pulled ahead of Polaroid in the development of digital photography. The filing was part of an agreement with bondholders, from whom Polaroid chose to withhold payments last July.
Though Polaroid still has the world's best-selling camera, the I-Zone, it is now struggling to catch up with new digital printing technology, dubbed Opal and Onyx, from its once-formidable research team. Polaroid has been unable to find a partner with the cash and retail distribution to help launch Opal and Onyx, which are processes to print photo-quality digital images.
Last fall, the company sold its photo ID business and other real estate in an effort to pare down and raise cash to pay off debt.
A Fresh Obstacle to Retaining Key Employees: A bid to prevent insiders from profiting by a company's breakup leaves some room to maneuver
Laurie Selber Silverstein
March 2006
Reprinted with permission from the March 06, 2006 edition of
The National Law Journal (c) 2006 ALM Properties, Inc.
All rights reserved.
Further duplication without permission is prohibited.
Introduction
Since the early 1990s, key employment-retention plans (KERPs) have been commonplace in Chapter 11 bankruptcy cases. These plans, which often provide hefty compensation to induce managers to remain with the struggling company, historically have been approved under §363 and §105 of the U.S. Bankruptcy Code. In the absence of a statute directing a specific standard for review of KERPs, courts applied the general §363 standard and looked to whether a sound business purpose justified the plan, and/or whether the debtor properly exercised its business judgment. See, e.g., In re Montgomery Ward Holding Corp., 242 B.R. 147 (D. Del. 1999). Various courts have approved KERPs when they were fair and reasonable under the circumstances. See In re Georgetown Steel Co., 306 B.R. 549, 555-56 (Bankr. D.S.C. 2004) (collecting cases).
It has been suggested that Congress believed that judges had too much discretion in this area. With the recently passed Bankruptcy Abuse Prevention and Consumer Protection Act, Congress now has attempted to specifically delineate the magnitude of retention and severance payments that may be made to "insiders" -- typically, officers and other senior management employees with significant decision-making authority. New §503(c) is a limitation on the allowance or payment of a transfer "for the purpose of inducing [an insider] to remain with the debtor's business;" severance payments to insiders; or "other transfers or obligations outside the ordinary course" to, among others, insiders.
The legislative history, such as it is, confirms the broad scope of §503(c). Sen. Edward M. Kennedy, D-Mass., proposed the amendment as a last-minute addition to the bankruptcy bill, and it received little comment at the time. While there does not appear to be a transcript of his oral comments, in his written "Statement on Bankruptcy Cloture Vote" released on March 8, 2005, Kennedy expresses his concern over the "glaring abuses of the bankruptcy system by the executives of giant companies like Enron Corp. and WorldCom Inc. and Polaroid Corp., who lined their own pockets, but left thousands of employees and retirees out in the cold."
Its detractors were concerned that Kennedy's amendment would prevent responsible companies from successfully reorganizing, and advanced that §503(c) should only prevent payments to insiders in the event of fraud, mismanagement or conduct contributing to insolvency. Cong. Rec. S2341 (March 9, 2005) (statement of Sen. Orrin G. Hatch); Cong. Rec. H2050-51 (April 14, 2005) (statement of Rep. Chris Cannon). A letter from the directors of the Association of Insolvency and Restructuring Advisors to that effect was also placed in the Congressional Record. In the end, the amendment was adopted in its original, broad-brush form.
Whether judges have lost all discretion with respect to key management compensation is up for debate, however. While there have not been many cases addressing §503(c), attorneys and judges are coming up with creative approaches to address compensation issues consistent with the statute and their sense of fairness and with an eye toward the policies of the Office of the United States Trustee (UST). At least in the context of liquidating cases, judges have not hesitated to find a way to approve plans they determined were appropriate under the circumstances.
After Polaroid defeated Kodak in a patent battle, Kodak left the instant camera business on January 9, 1986.
Polaroid developed an instant movie system, Polavision, based on the Dufaycolor process. The product arrived on the market when videotape based systems were rapidly gaining popularity. As a result, Polavision was unsuccessful and most of the manufactured product was sold off as a job lot at immense cost to the company. Its underlying technology was later improved for use in the Polachrome instant slide film system.
The company also was one of the early manufacturers of digital cameras, with the PDC-2000 in 1996;[2] however, they failed to capture a large market share in that segment.
On October 11, 2001, Polaroid Corporation filed for Chapter 11 bankruptcy protection. Almost all the company's assets (including the "Polaroid" name itself) were sold to a subsidiary of Bank One. They went on to form a new company, which also operates under the name "Polaroid Corporation".[3] It stopped making Polaroid cameras in 2007 and stopped selling Polaroid film after 2009, to the consternation of some users.[4][5]
The renamed "old" Polaroid now exists solely as an administrative shell.[6] Its bankruptcy was widely believed to be the result of the failure of its senior management to anticipate the effect of digital cameras on its film business.
On December 18, 2008, the post-reorganization Polaroid Corp. filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the District of Minnesota. The bankruptcy filing came shortly after the criminal investigation of its parent company, Petters Group Worldwide, and the parent company founder, Tom Petters.[7]
On January 5, 2010, Polaroid partnered with Lady Gaga, appointing her as Creative Director for the company. A press release stated that she would be the "new face" of Polaroid.
The photographic equipment maker, which filed for Chapter 11 protection on Oct. 12, will ask the U.S. Bankruptcy Court in Wilmington, Del., to approve its employee retention plan at an April 5 hearing, Polaroid spokesman Skip Colcord said.
Saddled with $950 million in debt, Polaroid has shed about 4,200 employees since December, partly through planned restructuring. But much of its top talent has chosen to leave as the firm, best known for its instant film and cameras, has struggled to drum up a restructuring plan while so far unsuccessfully finding a buyer for all or part of the company.
In December, Polaroid said it planned to reduce the employee headcount from 8,865 to 5,500 by June. As of Tuesday, the firm employed 4,700, exceeding the targeted reduction by roughly three months.
"We've lost a lot of people with the skills necessary to get us through Chapter 11," Colcord said. "We need to create incentives to retain those people."
Colcord declined to discuss details of the plan, but said it would exclude Polaroid CEO Gary DiCamillo.
Meanwhile, the company expects to file its reorganization plan by the court-imposed April 29 deadline. Colcord could not say Tuesday whether that included a sale of the entire company or certain divisions.
One analyst, who asked not to be identified, said Polaroid is having trouble finding a buyer because few are willing to pay for the company's instant film assets, since the true cost of cannibalizing it from digital technology remains unclear, and that others are reluctant to take on the debt.
Film sales, which had been lagging last summer, plunged about 5 or 6 percent after the Sept. 11 terrorist attacks, but have since recovered a bit, the analyst said.
Polaroid received a $50 million debtor-in-possession financing as part of its October bankruptcy filing to provide additional liquidity and capital for operations.
The Cambridge, Mass.-based company filed for bankruptcy after struggling to pay off its nearly $1 billion in debt, part of which was coming due, while losing market share and sales to rivals Eastman Kodak, Hewlett-Packard, Canon and others, which pulled ahead of Polaroid in the development of digital photography. The filing was part of an agreement with bondholders, from whom Polaroid chose to withhold payments last July.
Though Polaroid still has the world's best-selling camera, the I-Zone, it is now struggling to catch up with new digital printing technology, dubbed Opal and Onyx, from its once-formidable research team. Polaroid has been unable to find a partner with the cash and retail distribution to help launch Opal and Onyx, which are processes to print photo-quality digital images.
Last fall, the company sold its photo ID business and other real estate in an effort to pare down and raise cash to pay off debt.
A Fresh Obstacle to Retaining Key Employees: A bid to prevent insiders from profiting by a company's breakup leaves some room to maneuver
Laurie Selber Silverstein
March 2006
Reprinted with permission from the March 06, 2006 edition of
The National Law Journal (c) 2006 ALM Properties, Inc.
All rights reserved.
Further duplication without permission is prohibited.
Introduction
Since the early 1990s, key employment-retention plans (KERPs) have been commonplace in Chapter 11 bankruptcy cases. These plans, which often provide hefty compensation to induce managers to remain with the struggling company, historically have been approved under §363 and §105 of the U.S. Bankruptcy Code. In the absence of a statute directing a specific standard for review of KERPs, courts applied the general §363 standard and looked to whether a sound business purpose justified the plan, and/or whether the debtor properly exercised its business judgment. See, e.g., In re Montgomery Ward Holding Corp., 242 B.R. 147 (D. Del. 1999). Various courts have approved KERPs when they were fair and reasonable under the circumstances. See In re Georgetown Steel Co., 306 B.R. 549, 555-56 (Bankr. D.S.C. 2004) (collecting cases).
It has been suggested that Congress believed that judges had too much discretion in this area. With the recently passed Bankruptcy Abuse Prevention and Consumer Protection Act, Congress now has attempted to specifically delineate the magnitude of retention and severance payments that may be made to "insiders" -- typically, officers and other senior management employees with significant decision-making authority. New §503(c) is a limitation on the allowance or payment of a transfer "for the purpose of inducing [an insider] to remain with the debtor's business;" severance payments to insiders; or "other transfers or obligations outside the ordinary course" to, among others, insiders.
The legislative history, such as it is, confirms the broad scope of §503(c). Sen. Edward M. Kennedy, D-Mass., proposed the amendment as a last-minute addition to the bankruptcy bill, and it received little comment at the time. While there does not appear to be a transcript of his oral comments, in his written "Statement on Bankruptcy Cloture Vote" released on March 8, 2005, Kennedy expresses his concern over the "glaring abuses of the bankruptcy system by the executives of giant companies like Enron Corp. and WorldCom Inc. and Polaroid Corp., who lined their own pockets, but left thousands of employees and retirees out in the cold."
Its detractors were concerned that Kennedy's amendment would prevent responsible companies from successfully reorganizing, and advanced that §503(c) should only prevent payments to insiders in the event of fraud, mismanagement or conduct contributing to insolvency. Cong. Rec. S2341 (March 9, 2005) (statement of Sen. Orrin G. Hatch); Cong. Rec. H2050-51 (April 14, 2005) (statement of Rep. Chris Cannon). A letter from the directors of the Association of Insolvency and Restructuring Advisors to that effect was also placed in the Congressional Record. In the end, the amendment was adopted in its original, broad-brush form.
Whether judges have lost all discretion with respect to key management compensation is up for debate, however. While there have not been many cases addressing §503(c), attorneys and judges are coming up with creative approaches to address compensation issues consistent with the statute and their sense of fairness and with an eye toward the policies of the Office of the United States Trustee (UST). At least in the context of liquidating cases, judges have not hesitated to find a way to approve plans they determined were appropriate under the circumstances.