- The Washington Times - Tuesday, March 11, 2003

TROY, Mich., March 11 (UPI) — Kmart Corp. has laid off about a dozen top executives as the struggling discount retailer prepares to emerge from Chapter 11 bankruptcy protection next month.

The senior managers were among the latest round of terminations expected at Kmart corporate headquarters.

Company spokeswoman Lori McTavish told the Detroit Free Press the retailer expects to layoff between 25 percent and 35 percent of its senior level executives this month and possible hundreds of the 2,900 remaining headquarters employees.

A source told the newspaper 500 to 1,000 workers would be fired.

About 1,000 headquarters workers have been eliminated since Kmart filed for bankruptcy 14 months ago. Kmart has closed 600 stores and fired 67,000 employees.

The company's comeback plan submitted to U.S. Bankruptcy Court in Chicago calls for a much smaller retailer chain to come out of bankruptcy by April 30.

The retailer had 2,114 stores, 234,000 employees and annual sales of $36 billion in 2000. It would emerge from bankruptcy with about 1,500 stores, 170,000 workers and projected sales of $25 billion after restructuring.

Kmart last made a profit in 1999 and projects a small $179 million profit in 2004 after losing $3.2 billion this year.

The FBI, the Securities and Exchange Commission and a congressional committee are investigating the collapse of Kmart's finances in 2001 under former chief executive officer Charles "Chuck" Conaway.

Conaway and former president Mark Schwartz allegedly misstated earnings to conceal losses, bought two new corporate jets and gave themselves and 23 key managers $28 million in questionable retention loans months and weeks before declaring bankruptcy.

Kmart's board fired 10 former executives for cause after conducting an internal company review.

The Free Press said a new board would be publicly announced April 9 in documents filed at the start of a two-day hearing in U.S. Bankruptcy Court.


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