A bankruptcy judge has formally approved Kmart Corp.'s request to close 283 stores across the country, clearing the way for liquidation sales to begin at those outlets. The sales are expected to generate more than $500 million for the Troy, Mich.-based discount retailer.
U.S. Bankruptcy Judge Susan Pierson Sonderby on Wednesday, March 20, approved Kmart's store-closing procedures and the group of seven companies that will conduct its liquidation sales.
Kmart made the decision to close the stores in the aftermath of its Chapter 11 bankruptcy filing on Jan. 22. The retailer has said it expects the savings from store closings to be about $45 million annually after this year.
Kmart plans to use the cash flow generated by the liquidation sales to focus on its remaining stores. The current retail value of the merchandise in the closing stores is estimated at $1.2 billion to $1.3 billion, Kmart said.
Judge Sonderby also approved Kmart's request to continue its licensing agreements and pay outstanding accounts with its five major brands: Martha Stewart Living Omnimedia Inc.; Disney Enterprises Inc.; G.H. Productions Inc., which supplies its Jaclyn Smith line; Joe Boxer Licensing LLC; and Kathy Ireland World Wide LLC. Kmart said that the five brands account for roughly $2.7 billion annually in gross sales.