Ritchie Capital Asks Court to Terminate Asset Freeze and Receivership of Petters...

Ritchie Capital Asks Court to Terminate Asset Freeze and Receivership of
Petters Group Worldwide and Its Subsidiaries, and to Declare Freeze and
Receivership Void

LISLE, Ill., March 24 /PRNewswire/ -- Ritchie Capital Management, L.L.C. and
related companies ("Ritchie"), the largest secured creditors in the bankruptcy
case of Petters Group Worldwide, LLC ("PGW"), has filed a motion with the U.S.
District Court for the District of Minnesota seeking to have the court vacate
the asset freeze and receivership it previously ordered with respect to PGW.
The motion also asks the court to declare the freeze and receivership void ab
initio (that is, from the beginning).

The receivership and asset freeze are invalid because Federal prosecutors
failed to meet requirements of the law necessary to take such actions, the
motion states. "This is a problem created by the Government and Petters,
magnified by the way Receiver (Douglas) Kelley has exceeded his powers. This
Court, however, has a duty now to correct the over breadth of its orders," the
motion states.

The motion also requests that the court forbid the use of PGW assets to pay
fees billed by the court-appointed receiver and his advisors, on the grounds
that the assets of PGW and its subsidiary Polaroid Corporation were improperly
frozen. Based on the law and facts in this case, "Kelley and his agents may
not pay themselves from PGW or Polaroid assets," the motion states.

PGW is the holding company for a group of legitimate businesses that were
owned by Thomas Petters ("Petters"). Petters also owned Petters Company, Inc.
(PCI), which federal prosecutors allege was used by Petters to conduct a
massive Ponzi scheme, estimated to have defrauded victims of more than $3
billion.

Before it became aware of the existence of the alleged Ponzi scheme, Ritchie
loaned approximately $160 million to PGW for legitimate business transactions.
These loans were secured with liens on Polaroid's trademark rights in China,
India and Brazil.

In a Memorandum of Law filed with the court in support of its motion, Ritchie
cites case law that it believes establishes that:

-- Ritchie Capital has a right to intervene in the case to seek a
reversal
of the court's earlier decision to freeze PGW assets and establish
a receivership over them, because Ritchie owns an interest in assets
that the court ordered to be frozen. "Ritchie is a third-party here
who owns liens against certain assets of Polaroid (which was not a
named
defendant) and certain assets of PGW (which, though named as a
defendant, was not implicated in the fraud, at least in the facts so
far
alleged in the record)," the memorandum states. Relevant case law
establishes that Ritchie has the right to protect its interest in the
Polaroid trademarks even though an agreement was reached between
Petters
and Federal prosecutors allowing the asset freezing and receivership,
the memorandum states.

-- The court appointed receiver, Douglas Kelley, "has acted (and
apparently will continue to act) adversely to the rights of Ritchie in
regard to the improperly restrained assets," the filing states.
Kelley has stated that his goal is to provide equal distribution of
all
recoverable assets to victims of the alleged Ponzi scheme. The Ritchie
filing argues that this is improper, because "the victims and
creditors of the various corporations named in the receivership are
not
legally 'all in the same boat,' as the Receiver (Kelley) would
have it."

-- The Receivership orders are void to the extent that they exceed powers
authorized under the law, the filing further states. For the orders to
be valid, the Government must show that a person is violating or about
to violate a federal fraud statute; that the person is disposing of
property; and that the subject property was obtained as a result of or
traceable to the fraudulent activities, the Ritchie memorandum states.
However, the findings of fact in the case were stipulated between
Petters and prosecutors rather than established as fact in the court,
and thus "are insufficient, as a matter of law, to authorize the
restraining order and receivership as to PGW and its subsidiaries.
There is no evidence in the record that PGW or its subsidiaries were
involved in the fraudulent conduct of PCI; nor that they were
alienating
or disposing of property; nor that any of PGW or its subsidiaries'
property was traceable proceeds of the fraudulent activities," the
memorandum states.

-- Freezing of Polaroid and PGW assets further is invalid because the law
"does not provide for a restraint of assets believed to be tied to
a money-laundering offense, and money laundering ... is the only
offense
alleged against PGW." The money laundering charge is based on a
transfer of $3 million of funds from PGW to Petters personally, but no
evidence has been brought forward to show that the funds were obtained
through fraud, the memorandum states.

The filing also seeks to have Kelley removed as receiver for the PGW
companies. "For the untainted corporate assets at least, [Ritchie is] entitled
to a conflict-free receiver who is not beholden to the Government, nor trying
to assist the Government in maximizing future forfeitures, or creating one big
pot of liquidated assets from which it proposes to dole out pro rata portions
to the criminals' alleged victims, and third party corporate lienholders and
unsecured creditors alike," the filing states.

About Ritchie Capital

Ritchie Capital is a diversified alternative asset management firm established
in 1997 with interests in hedge funds, private equity, venture capital,
insurance, energy and real estate and with offices in Lisle, IL, New York, NY
and Menlo Park, CA.

SOURCE Ritchie Capital Management, L.L.C.

Justin Meise, of River Communications for Ritchie Capital, +1-845-226-8970,
jmeise@riverinc.com