MA Attorney General Seeks Polaroid Pension Protection

April 30, 2002 ( - Massachusetts Attorney General Thomas Reilly has asked a US bankruptcy judge to make sure that whoever buys Polaroid Corp. maintains the company's retiree benefit program.

Reilly made the request in US Bankruptcy Court in Delaware where Polaroid is seeking bankruptcy protection.

Reilly’s move to get involved in Polaroid’s case comes shortly after the beleaguered camera company agreed to sell most of its assets for $265 million to One Equity Partners,  Bank One Corp.’s venture capital arm.

However, the One Equity Partner deal relieves it of any Polaroid pension liabilities.

“This company should not be sold to any bidder who is not willing to keep the retirees’ health plan alive,” Reilly told the Associated Press.

Reilly also said he would propose state legislation that would allow employees to retain health insurance coverage after a company shuts down.

Polaroid filed for Chapter 11 bankruptcy protection in October 2001 after failing to meet payments on nearly $1 billion of debt.

The same month, the company notified its employees that its pension plan was underfunded by about $100 million.

And, days before it’s filing for bankruptcy, Polaroid dropped medical coverage, life insurance, and severance benefits for retirees.

The Pension Benefit Guaranty Corp. (PBGC) was ready to step in, Polaroid said in an October 1 letter. However, the company warned retirees that if the PBGC took over the pension plan, it was unlikely lump sum payouts would continue.