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Bankruptcy Trustee Files Suit Against Former 'N Sync Member

The trustee in the Polaroid chapter 7 bankruptcy case has been poring over financial documents for some time. Polaroid filed for bankruptcy in 2008 after its former owner, Tom Petters, faced charges in an elaborate Ponzi scheme amounting to more than $3 billion. Petters was sentenced to 50 years in prison. The trustee in the chapter 7 bankruptcy is seeking to recover any funds it can on behalf of the bankruptcy estate.

Late last month the chapter 7 trustee filed a lawsuit against former boy band star Lance Bass and his current production company. The lawsuit alleges that Polaroid gave the production company $40,000 in December 2005. The trustee claims the payment was given "as a gift or donation, without receiving a reasonable equivalent value in exchange for the transfer."

The bankruptcy trustee seeks to recover the funds as a fraudulent transfer. The lawsuit alleges that Polaroid was insolvent at the time it gave the cash to the production company. The trustee says the payment was made with "intent to hider, delay or defraud a creditor." Polaroid allegedly did not show a profit between 2003 and the date of filing in 2008. Petters bought the company in 2005.

Ohio bankruptcy attorneys know that trustees have the power to avoid asset transfers in certain circumstances. The chapter 7 bankruptcy trustee has been seeking to claw back money that Petters doled out prior before allegations of fraud arose in the Ponzi scheme. The trustee reportedly has even filed a lawsuit to claw back slightly more than a-quarter-million dollars from a Catholic High School.

Source: The Wall Street Journal, "'N Sync's Lance Bass Targeted in Polaroid Bankruptcy," 10 Dec 2010

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