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Accounting Eportfolio

This document discusses Polaroid Corporation filing for Chapter 11 bankruptcy in 2001. Polaroid was in debt since 1988 and filed for voluntary bankruptcy protection in Delaware after its stock price declined significantly. The company listed $1.81 billion in assets but $948.4 million in debts. Polaroid's bankruptcy is attributed to senior management failing to anticipate the impact of digital cameras on its film business. After bankruptcy, Polaroid's assets were sold and it continued operating while seeking a buyer or ways to restructure its debts.

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35 views

Accounting Eportfolio

This document discusses Polaroid Corporation filing for Chapter 11 bankruptcy in 2001. Polaroid was in debt since 1988 and filed for voluntary bankruptcy protection in Delaware after its stock price declined significantly. The company listed $1.81 billion in assets but $948.4 million in debts. Polaroid's bankruptcy is attributed to senior management failing to anticipate the impact of digital cameras on its film business. After bankruptcy, Polaroid's assets were sold and it continued operating while seeking a buyer or ways to restructure its debts.

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Running head: Polaroid Corporation 1

Medes Bouanga

Professor George Smith

Accounting 2010

SLCC

12/12/2017
Polaroid Corporation 2

In business, the uncertainly of economic condition can put firms in the risk of

experiencing financial distress or bankruptcy. Bankruptcy is a phenomenon that is often feared

by companies; either by owners or managements. A company is considered to have failed in

business or unable to pay its debt when the company is unable to run its operations properly ad

cannot produce normally. In some cases, filling for bankruptcy is also considered the most

appropriate solution to resolve the issue of corporate debt that could not be resolved.

In order for the company to grow, the capital needs to be increase. The business world is

competitive. There are ups and downs, gain and losses. Revenue is necessary for business to

survive in the business world. Profits are valuable in business; a business that does not make a

profit for a long time may be forced onto bankruptcy in order to get out if the market or

reorganized it. Lack of revenue is one of the season why business claimed bankruptcy. There are

different forms of bankruptcy and this essay is about of them and how 1988 how Polaroid

Corporation filed for bankruptcy.

Polaroid is an American company that is a brand licensor and marketer of its portfolio of

consumer electronics to companies that distribute consumer electronics and eyewear. The

company was founded in 1937 by Edwin Land and George Wheelwright, to exploit the use of its

Polaroid polarizing polymer (polaroid.com). Mr. Land was a scientist whose ideas for a lens

that could polarize light -- that is, make light rays move in parallel -- formed the technological

underpinnings not only of instant photography, but of glare-free sunglasses and goggles that

World War II pilots used to spot submerged submarines. Mr. Wheelwright was a consummate

salesman who built the business around the products. (thenewyorktimes).


Polaroid Corporation 3

Polaroid was in debt since 1988. In 2001, they filed voluntary for chapter 11 bankruptcy

protection in Delaware, capping three days of speculation in which the instant photography

company stock had no traded. A chapter 11 case begins with the filing of a petition with the

bankruptcy court serving the area where the debtor has a domicile or residence. A petition may

be a voluntary petition, which is filed by the debtor, or it may be an involuntary petition, which

is filed by creditors that meet certain requirements.

Polaroid was brought down by the cold light of numbers. Polaroid was backed against a

financial wall. Its stock, which approached $50 in early 1998, was selling for 28 cents when the

New York Stock Exchange halted trading Wednesday. In its filing, the company listed $1.81

billion in assets and $948.4 million in debts. It has $360 million in bank debt falling due on Nov.

15, and owes its bondholders about $575 million(thenewyorktimes)

As part of the settlement, the original Polaroid Corporation changed its name to Primary

PDC Inc. Having sold its assets; it was now effectively nothing more than an administrative

shell. Primary PDC received approximately 35 percent of the "new" Polaroid, which was to be

distributed to its unsecured creditors (including bondholders As of late 2006 Primary PDC

remained in existence under Chapter 11 bankruptcy protection but conducts no commercial

business and has no employees.

Polaroids bankruptcy is widely attributed to the failure of senior management unable to

anticipate the impact of digital cameras on its film business. This type of managerial failure is

also known as the success trap

The company is still considering an outright sale of all or part of the company and that it

plans to cut further staff, close facilities and sell non-core assets to reduce costs. The intent had
Polaroid Corporation 4

been to pursue an out-of-court, pre-negotiated bankruptcy filing, but ultimately the company's

liquidity was just too tight and it just couldn't hold out long enough to get a deal done.

The company said it will continue to manufacture, market and distribute its core instant imaging

products and to provide customer service and support. Employees will continue to be paid with

full benefits. Their lenders have agreed to accelerate its efforts to sell all or parts of the company,

and that it has retained financial advisors to assist in that process. Polaroid later on obtained a

none-month extension on its loan waivers and an extra $10 million from its creditors and put it

on their real estate as collateral with bondholders.


Polaroid Corporation 5

References:

-The New York Times Company. 2012-10-03. Retrieved 2015-01-31.

- Sun Journal. Lewiston, Maine. Associated Press. February 9, 2008. pp. B8, B7.

-Dugan, Emily (2009-01-18). "Smile! Polaroid is saved". The Independent. London.

Retrieved 20

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