Ritchie Sues Polaroid, Calling Petters Allegations ‘Outrageous’

Mar 12 2009 | 4:11am ET

Ritchie Capital Management is fighting fire with fire: The hedge fund has countersued Polaroid Corp., calling its lawsuit against Ritchie “baseless, irresponsible and malicious.”

Polaroid’s bankruptcy trustee last month sued Ritchie and fellow hedge fund Acorn Capital Group, accusing the two of assisting the multi-billion fraud allegedly masterminded by hedge fund manager and businessman Tom Petters. According to Polaroid, Ritchie and Acorn “orchestrated efforts… to cover substantial investment losses and prefer its individual interests at the expense of Polaroid, its creditors and other stakeholders.”

Not so, says Ritchie, in a lawsuit filed yesterday asking a federal court in Minneapolis to junk Polaroid’s “outrageous” suit against it.

The trustee’s lawsuit “irresponsibly suggests, among other things, that Ritchie was aware of the fraudulent scheme perpetrated by Petters and tried to salvage its own loans at the expense of other creditors,” Ritchie says in the counterclaim. “Polaroid does not, because it cannot, directly allege that Ritchie was complicit in the fraud committed by Petters—or even suggest any means by which Ritchie could have been made aware of a fraud.”

In a statement, Ritchie accuses the Polaroid receiver, Douglas Kelley, of having a vendetta against the hedge fund, which he has lambasted for the high interest rates it charged Polaroid on several loans it made to the company while Polaroid was still run by Petters.

“The Polaroid complaint appears to be a weapon used by Douglas Kelley, receiver for Polaroid, in his efforts to silence and to retaliate and seek retribution against Ritchie for Ritchie's good faith challenges to the legitimacy of Kelley's receiverships and his installation as trustee in the bankruptcies of several of the Petters entities,” Ritchie said. “These efforts by Kelley not only unfairly hinder Ritchie's efforts to protect the interests of the investors in its managed funds, but also serve to perpetuate the receiverships.”

The Lisle, Ill.-based hedge fund has asked the court to declare its security interest in some Polaroid trademarks and in some pledged promissory notes valid and enforceable, a notion challenged by Kelley. Ritchie is also demanding that Polaroid pay its legal fees.

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