See more of the story

One of the largest creditors of the business estate of Wayzata businessman Tom Petters renewed efforts Friday to get access to assets it claims were improperly placed into bankruptcy protection.

Attorneys for Ritchie Capital Management argued in federal court that there is little, if any, solid evidence linking Petters Group Worldwide (PGW) to the alleged investment fraud that operated through Petters Company Inc. (PCI). PCI was the finance arm of the Petters organization. PGW included operating companies such as Polaroid Corp. and Sun Country Airlines.

"We want to be able to say that the bankruptcy was improperly commenced," Ritchie attorney Timothy Kelly told U.S. District Judge Ann Montgomery.

But government attorneys and an attorney for court-appointed receiver Doug Kelley argued that Ritchie is six months too late in its effort to free up the assets of PGW and is wrong in believing it has a right to do that.

"The court shouldn't turn back the clock and have a do-over," said assistant U.S. Attorney Robyn Millenacker, referring to the October action placing the Petters assets into receivership. "Ritchie will have to share in the pro rata proceeds with all the creditors."

Ritchie Capital Management loaned Petters and his business approximately $275 million in the months before everything fell apart. The hedge fund contends the loans went to PGW, not PCI, and thus are not part of the criminal investigation linking Petters and several associates to an alleged $3.5 billion Ponzi scheme. Ritchie claims it received collateral backed by Polariod assets, which were owned by PGW.

However, receiver Kelley replied in an affidavit filed earlier this week that Polaroid was purchased by Petters with funds generated through the alleged investment fraud and was thus tainted.

Montgomery said she would rule later on the Ritchie motion, which has failed in previous attempts.

On a separate matter, U.S. District Judge Richard Kyle, the presiding judge in the Petters criminal case, set a new trial date of Sept. 14 to give attorneys more time to work on Petters' defense. The previous trial date was June 9.

David Phelps • 612-673-7269