Kmart Reorganization Plan Approved23 Apr, 2003 By: Joan Villa
Kmart will emerge from bankruptcy May 5, a little lighter in store count but determined to rebuild as a “vital enterprise,” according to president and CEO Julian Day.
Day said he was “jubilant” that U.S. Bankruptcy Judge Susan Pierson Sonderby approved the Chapter 11 reorganization plan after overcoming 188 objections from creditors. The new Kmart will focus on exclusive brands such as Joe Boxer, Martha Stewart Everyday, Sesame Street and Disney, and will work to attract more Hispanic and African-American shoppers, the company said.
During the 15-month reorganization process, the Troy, Mich.-based retailer cut 67,000 jobs and closed 600 stores, leaving 1,513 locations and close to 180,000 employees. It reported $2.45 billion in losses in 2001 that grew to a $3.22 billion net loss last year.
Under the plan, hedge fund ESL Investments of Greenwich, Conn., will now be the retailer's largest shareholder with a 49 percent stake in the new company. ESL will convert its $2 billion in claims into stock and provide $109 million to fund operations.