The troubled retail giant, which operates 2,100 stores nationwide, views the $2 billion as the key to staying in business and engineering what it hopes will be a financial turnaround by next year.
U.S. Bankruptcy Judge Susan Pierson Sonderby had been expected to approve what attorneys have called the biggest "debtor-in-possession" financing deal ever for a company struggling to survive.
Kmart can use the money to pay its employees and restock the shelves of the stores it continues to operate.
The company is expected to close hundreds of unprofitable stores around the nation. It won't say which ones yet. Kmart bankruptcy attorney John Butler said the company wants to the break the bad news itself to employees who will lose their jobs in the reorganization.
Store managers and others are expected to get the word on a confidential basis within a week.
"Many of our employees are on pins and needles over whether they are implicated in this program," Butler said. He said he would hate to see employees learning that their store was closing through the media.
"This is business, but there is a human dimension to it," he said.
Sonderby rejected an effort to sidetrack the bonus program by the Union of Needle Trades, Industrial and Textile Workers, a Manhattan-based group that represents 3,000 Kmart distribution-center employees.
The $150 million approved by Sonderby is a ceiling on bonuses Kmart can pay to vice presidents, various middle managers and pharmacists whom it considers crucial to keeping stores in operation.
Union attorney William Widmer ridiculed the notion that more than 9,000 employees are key to Kmart's longevity. He said those likely to get the money were to blame for the company's woes.
He described the plan as "corporate self dealing" and said that bonuses to be paid for employees who stick with Kmart and resist moving to other, more secure companies remind him of an old Woody Allen quote.
"Ninety percent of life is just showing up," Widmer said, drawing guffaws from a courtroom packed with high-powered attorneys representing a broad array of corporations and others who do business with Kmart.
Butler retorted that key Kmart employees are highly marketable and said that one competitor had "set up a recruiting office near our headquarters in Michigan with the object of targeting our employees."
He also said that he suspected that the protesters were disgruntled because the program did not apply to them.
Kmart's creditors and bankers told Sonderby they thought the bonuses were a good idea, and in the end she approved the plan, saying she would bow to the company's business judgment.
Shares of Kmart were up a penny to close at $1.10 in trading on the New York Stock Exchange.
http://accesswdun.com/article/2002/3/197833