Kmart seeks court order to keep booze flowing

Posted 8:07AM on Tuesday 12th February 2002 ( 23 years ago )

TROY, Mich. - Kmart Corp. is seeking an emergency order from a bankruptcy judge so it can pay companies that supply its stores with alcohol. "It's one of those items that drives traffic," said Kmart spokesman Steve Pagnani. "And anything that drives traffic at our stores is important." The nation's third-biggest discount retailer filed for federal Chapter 11 bankruptcy protection Jan. 22. That was after disappointing holiday sales and fourth-quarter earnings, downgrades by credit-rating agencies and a stock dive. Several liquor suppliers have stopped delivering to Kmart, according to recent court filings cited by The Detroit News in Tuesday's editions. As many as 100 alcohol vendors may stop shipments within days, the filing said. As a result, Troy-based Kmart has asked for an emergency order authorizing it to pay select liquor suppliers. Other vendors, including Sara Lee Corp., Pepsi bottlers and Frito-Lay Inc. say Kmart is dragging its feet on their outstanding bills and have asked the court to clarify when their debts will be settled. "The payment timetable proposed by (Kmart) is camouflage for what amounts to a 15-month, interest-free unsecured loan," according to a joint filing by Pepsi and Frito-Lay. The issues are scheduled for action Wednesday by Chief Bankruptcy Judge Susan Pierson Sonderby in Chicago, where the case is being heard. Kmart already has received court approval to pay other critical vendors, including its egg and milk suppliers and Troy-based Handleman Co., its sole music vendor. Meanwhile, the Detroit Free Press reported Tuesday that Kmart has been a major contributor of unregulated soft money to political parties. Kmart gave $555,000 to parties and their causes in the two years leading up to the November 2000 election, the newspaper said, citing federal campaign reports collected by the Center for Responsible Politics. In 2000, Kmart reported a $244 million loss. The center's Steve Weiss said the donations show Kmart was hoping for access to politicians that would lead to a benefit for the company. Company officials said the giving was a necessary part of doing business. "We're proud to support candidates and elected officials that understand issues that are important to the retail industry," said Kmart spokesman Jack Ferry. In 2001, Kmart gave $175,000 to political party committees, including $50,000 to a Republican fund-raiser in Washington attended by President Bush.

http://accesswdun.com/article/2002/2/198910