NEW YORK (CNN/Money) - Polaroid Corp. is seeking bankruptcy court approval for an incentive plan to staunch the flood of employees leaving the company as it attempts to reorganize under Chapter 11 protection, the company said Tuesday.
The photographic equipment maker, which filed for Chapter 11 protection on Oct. 12, will ask the U.S. Bankruptcy Court in Wilmington, Del., to approve its employee retention plan at an April 5 hearing, Polaroid spokesman Skip Colcord said.
Saddled with $950 million in debt, Polaroid has shed about 4,200 employees since December, partly through planned restructuring. But much of its top talent has chosen to leave as the firm, best known for its instant film and cameras, has struggled to drum up a restructuring plan while so far unsuccessfully finding a buyer for all or part of the company.
In December, Polaroid said it planned to reduce the employee headcount from 8,865 to 5,500 by June. As of Tuesday, the firm employed 4,700, exceeding the targeted reduction by roughly three months.
"We've lost a lot of people with the skills necessary to get us through Chapter 11," Colcord said. "We need to create incentives to retain those people."
Colcord declined to discuss details of the plan, but said it would exclude Polaroid CEO Gary DiCamillo.
Meanwhile, the company expects to file its reorganization plan by the court-imposed April 29 deadline. Colcord could not say Tuesday whether that included a sale of the entire company or certain divisions.
One analyst, who asked not to be identified, said Polaroid is having trouble finding a buyer because few are willing to pay for the company's instant film assets, since the true cost of cannibalizing it from digital technology remains unclear, and that others are reluctant to take on the debt.
Film sales, which had been lagging last summer, plunged about 5 or 6 percent after the Sept. 11 terrorist attacks, but have since recovered a bit, the analyst said.
Polaroid received a $50 million debtor-in-possession financing as part of its October bankruptcy filing to provide additional liquidity and capital for operations.
The Cambridge, Mass.-based company filed for bankruptcy after struggling to pay off its nearly $1 billion in debt, part of which was coming due, while losing market share and sales to rivals Eastman Kodak, Hewlett-Packard, Canon and others, which pulled ahead of Polaroid in the development of digital photography. The filing was part of an agreement with bondholders, from whom Polaroid chose to withhold payments last July.
Though Polaroid still has the world's best-selling camera, the I-Zone, it is now struggling to catch up with new digital printing technology, dubbed Opal and Onyx, from its once-formidable research team. Polaroid has been unable to find a partner with the cash and retail distribution to help launch Opal and Onyx, which are processes to print photo-quality digital images.
Last fall, the company sold its photo ID business and other real estate in an effort to pare down and raise cash to pay off debt.