Kmart Still Moving Toward Reorganization

By MIKE ROBINSON Associated Press Writer

CHICAGO (AP) - Attorneys for retailing giant Kmart Corp. believe they are close to getting court approval of a reorganization plan that will enable them to emerge from more than a year in bankruptcy.

"I think people are focused on trying to conclude this (Tuesday)," Kmart attorney Jack Butler told reporters Monday night after breaking a logjam of objections that had been standing in the way of court approval.

The company had hoped to get its reorganization plan approved by U.S. Bankruptcy Judge Susan Pierson Sonderby last week but the effort was bogged down last Wednesday with 188 objections to the blueprint facing the court.

That daunting logjam with the Passover and Easter holidays looming prompted Kmart attorneys to give up their hopes of getting quick approval of the plan and emerging from bankruptcy by the end of the month.

The attorneys kept negotiating throughout the weekend, and came to court Monday with 101 of the objections resolved.

Bargaining continued throughout the day Monday, with groups of attorneys meeting in the courtroom, halls and nearby witness rooms.

Those with objections ranged from big competitor Wal-Mart Stores Inc. and big creditor Capital Factors Inc., which holds $20 million in unsecured Kmart debt, to landlords worried about local leases.

After U.S. Bankruptcy Court Judge Susan Pierson Sonderby called a halt for the night, Butler told reporters only six objections stood between Kmart and approval.

Some of the others were resolved by bargaining. Some were bypassed by promises of later resolution. Some were thrown out by Sonderby after no attorneys showed up in court on behalf of the objectors.

Company officials said they were happy with the progress.

"I was a little surprised by how much progress, the rapid progress we were able to make," CEO Julian Day said.

While Kmart executives were plainly hoping to wrap things up on Tuesday, the courtroom was reserved for Wednesday in case of snags.