On February 12, 2009, the trustee in the bankruptcy proceeding of Polaroid Corporation, the camera and film company owned by Thomas J. Petters, filed lawsuits in the United States Bankruptcy Court for the District of Minnesota against two hedge fund managers, Acorn Capital Group, LLC and Ritchie Capital Management, LLC, claiming that they exploited Polaroid to extract value from the company shortly before Petters’ alleged fraud was uncovered.  In the actions against Acorn and Ritchie, the trustee asserted that both hedge fund firms used their positions as creditors to conceal losses at Petters’ businesses and to divest Polaroid of assets in the form of liens or other guarantees shortly before the Ponzi scheme collapsed.  We detail the complex allegations in the trustee’s complaints, and in the process offer insight into considerations relevant to hedge funds that have or may obtain investments in or claims with respect to companies in the zone of insolvency.