Polaroid court approves $70 million sale of company membership units

By Kali Hays

New York, Dec. 17 – Polaroid Corp.’s Chapter 7 trustee, John R. Stoebner, received authorization to sell all current membership units of PLR, IP Holdings, LLC owned by the company for $70 million, according to a Wednesday order from the U.S. Bankruptcy Court for the District of Minnesota.

As previously reported, the buyer is a “to-be-formed Delaware limited liability company” that will initially be majority owned by PFCF, LLC and Picture Eagle, LLC.

Of the amount, $18 million of the “heavily negotiated” purchase price is based on the assumption of liabilities, including secured debt, according to the motion.

After Polaroid satisfies “certain distribution obligations to capital members and certain other obligations” the sale proceeds available to the estate are expected to be $7.5 million.

However, Polaroid agreed to receive its share of the sale proceeds in the form of a secured promissory note from the buyer in lieu of cash payment.

The promissory note will bear a yearly interest rate of 10% and mature in May 2017, and the buyer will pay Polaroid an origination fee of $400,000 and $25,000 per month as loan management, according to the motion.

Stoebner said that the interest earned on the note should afford the estate approximately $2.91 million in additional value.

As previously reported, Polaroid completed a sale of all of its intellectual property rights in May 2009 to PLR Acquisition, a joint venture of Hilco Consumer Capital Corp. and Gordon Brothers Brands, LLC, for $49.5 million.

Part of that sale price provided that the Polaroid estate receive 25% of the membership units in PLR, then valued at $16.25 million, representing a minority interest in PLR.

The units included in the sale are those held by all owners of Polaroid, Stoebner, and those held by Hilco and Gordon Brothers, totaling about 69% of the total members, according to the motion.

Some of the members will have continued participation in “the new enterprise” through the contribution or rollover of their membership interests.

Stoebner said that he has been in negotiations over the sale since April and that the manager and all members of PLR support the sale.

If the transaction is not closed by Dec. 31, all parties have the right to terminate their involvement.

Polaroid, a Minnetonka, Minn., instant and digital imaging company, filed for bankruptcy on Dec. 18, 2008. Its Chapter 7 case number is 08-46617.

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