K Mart
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After teetering for several days, Kmart (NYSE: KM) lost its balance today and became the largest retailer ever to file for Chapter 11 bankruptcy. In making the announcement this morning, the 105-year-old company mentioned several factors that led to the decision, including "a rapid decline" in liquidity, and "an erosion of supplier confidence."
The final straw came yesterday when food wholesaler Fleming Companies (NYSE: FLM) halted shipments, saying Kmart had failed to make its regular weekly payment. Scotts Company (NYSE: SMG), a maker of lawn and garden products, decided last week to delay shipments until it found out more about the troubled retailer's financial woes. Add to that another downgrade from Moody's, and it was all over but the filing. Chapter 11 bankruptcy gives corporations debt relief while they reorganize and continue to operate.
What this means for Kmart shoppers: Not much, apparently. The company secured a $2 billion financing package from Credit Suisse First Boston, and says all 2,114 of its stores will remain open for the time being. It will continue to honor all credit cards, gift certificates, and store credits. Employees will continue to receive all their pay and benefits, though they may face staff reductions at a later date...