KPMG LLP, Polaroid Corp's auditor, downplayed the company's financial woes in regulatory filings before the instant-photography company sought bankruptcy protection in 2001, a court-appointed examiner concluded.
KPMG failed to force Polaroid officials to write off assets and include language questioning whether the company was still viable in filings with the US Securities and Exchange Commission, Perry Mandarino of the New York advisory firm Traxi LLC said in a 91-page report.
A bankruptcy judge in Delaware appointed Mandarino to examine KPMG's handling of Polaroid's books after shareholders and creditors alleged company officials engaged in a "wide array" of accounting irregularities, mis-management and wrongdoing. The New York Times and the Boston Globe first reported Mandarino's conclusions.
"The investigation uncovered evidence that Polaroid's financial condition at and after Dec. 31, 2000, through July 31, 2001, actually may have been more negative than is reflected in its public filings with the SEC," Mandarino noted.
KPMG officials weren't immediately available for comment today. KPMG Spokesman Tim Connolly told The New York Times "KPMG remains confident that it acted appropriately at all times and stands by its actions in this matter."
Mandarino's report was issued Friday after US Bankruptcy Judge Peter Walsh in Wilmington rebuffed KPMG's bid to have the documents sealed. Polaroid sought Chapter 11 protection in Wilmington in October 2001.
The examiner rejected shareholders' and creditors' contentions that Polaroid officials improperly filed for bankruptcy protection and then undervalued the company's assets to facilitate their sale.
In July of last year, Bank One Corp's venture capital group, One Equity Partners, purchased most of Polaroid's assets for US$255 million. The assets were placed in a newly formed company that operates under the Polaroid name and is 65 percent owned by One Equity Partners and 35 percent owned by Primary PDC.
Mandarino questioned whether KPMG auditors properly reflected Polaroid's deteriorating financial situation in the months leading to its Chapter 11 filing.
The auditors' missteps included failing to force Polaroid officials by late 2000 to write off an asset that would have given the company tax benefits for past losses if the asset became profitable in the future, the report said.
KPMG officials knew as early as 1999 the company was unlikely to return to profitability given its continuing financial problems.
Polaroid filed for bankruptcy protection after competition from digital cameras and other technological advances caused sales of instant film to plummet. The company was left with mounting debt.
KPMG auditors also erroneously relied on assurances from Dresdner Kleinwort Wasserstein, Polaroid's investment bankers, that the company had a "90 percent" likelihood of refinancing its debt and staying in business when KPMG decided not to issue a so-called "going concern" warning in regulatory filings, Mandarino said in the report.
Such warnings are designed to alert investors that auditors are questioning whether a company is viable or may need to be reorganized in bankruptcy court.
"The examiner found that KPMG's reliance on DKW was unsubstantiated, as KPMG did not have tangible documentation to support Polaroid's ability to consummate the refinancing," Mandarino said.
"KPMG should have performed additional procedures to satisfy themselves with regard to the 90 percent assessment by DKW, such as, requesting term sheets, reviewing drafts of the proposed loan documentation and interviewing prospective lenders," the examiner added.
Dresdner, Kleinwort Wasserstein is a unit of Allianz AG, Europe's top insurer. Allianz acquired the investment bank as part of its purchase of Dresdner Bank AG, Germany's fourth-largest lender, two years ago. Since the acquisition, DKW has lost money, market share and several senior bankers.
EUROPEAN TARGETS: The planned Munich center would support TSMC’s European customers to design high-performance, energy-efficient chips, an executive said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said that it plans to launch a new research-and-development (R&D) center in Munich, Germany, next quarter to assist customers with chip design. TSMC Europe president Paul de Bot made the announcement during a technology symposium in Amsterdam on Tuesday, the chipmaker said. The new Munich center would be the firm’s first chip designing center in Europe, it said. The chipmaker has set up a major R&D center at its base of operations in Hsinchu and plans to create a new one in the US to provide services for major US customers,
The Ministry of Transportation and Communications yesterday said that it would redesign the written portion of the driver’s license exam to make it more rigorous. “We hope that the exam can assess drivers’ understanding of traffic rules, particularly those who take the driver’s license test for the first time. In the past, drivers only needed to cram a book of test questions to pass the written exam,” Minister of Transportation and Communications Chen Shih-kai (陳世凱) told a news conference at the Taoyuan Motor Vehicle Office. “In the future, they would not be able to pass the test unless they study traffic regulations
‘A SURVIVAL QUESTION’: US officials have been urging the opposition KMT and TPP not to block defense spending, especially the special defense budget, an official said The US plans to ramp up weapons sales to Taiwan to a level exceeding US President Donald Trump’s first term as part of an effort to deter China as it intensifies military pressure on the nation, two US officials said on condition of anonymity. If US arms sales do accelerate, it could ease worries about the extent of Trump’s commitment to Taiwan. It would also add new friction to the tense US-China relationship. The officials said they expect US approvals for weapons sales to Taiwan over the next four years to surpass those in Trump’s first term, with one of them saying
‘COMING MENACINGLY’: The CDC advised wearing a mask when visiting hospitals or long-term care centers, on public transportation and in crowded indoor venues Hospital visits for COVID-19 last week increased by 113 percent to 41,402, the Centers for Disease Control (CDC) said yesterday, as it encouraged people to wear a mask in three public settings to prevent infection. CDC Epidemic Intelligence Center Deputy Director Lee Chia-lin (李佳琳) said weekly hospital visits for COVID-19 have been increasing for seven consecutive weeks, and 102 severe COVID-19 cases and 19 deaths were confirmed last week, both the highest weekly numbers this year. CDC physician Lee Tsung-han (李宗翰) said the youngest person hospitalized due to the disease this year was reported last week, a one-month-old baby, who does not
RSS