Court Tells Sears: Keep the Shoes

A U.S. bankruptcy court judge has ruled that Footstar Inc. (Mahwah, N.J.) may continue to sell its products in Kmart stores via the contract it has with Kmart Holdings Corp. (Troy, Mich.).

Sears Holdings Corp. (Hoffman Estates, Ill.) had attempted to block the bankrupt shoe marketer’s merchandise from Kmart stores, particularly 43 current Kmart stores that Sears and Kmart are planning to turn into a new concept called Sears Essential. Sears claimed that Footstar was unable to supply the support staff necessary to maintain the leased shoe departments, a violation of its contract with Kmart. But Footstar pleaded that the contract with Kmart provides 95 percent of its revenues and has been a centerpiece of its plan to emerge from bankruptcy protection.

While the ruling maintained the overall contract Footstar has with Kmart, it did not address the specific request regarding the 43 stores.