Kmart is seeking to recover $49 million paid to Handleman under b...
Kmart is seeking to recover $49 million paid to Handleman under bankruptcy protection, distributor said Mon. Handleman said discount chain filed complaint with U.S. Bankruptcy Court, Chicago, seeking repayment of money it gave distributor as “critical trade vendor” shortly…
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after filing for bankruptcy protection last year. Kmart, which emerged from bankruptcy protection in May, paid more than $300 million to key suppliers deemed so important that prebankruptcy bills were paid immediately. Other creditors wait until bankruptcy process is completed. Such critical vendor payments are common in bankruptcy cases, but federal judge in Chicago ruled earlier this year that Kmart should not have made them. Kmart is appealing that decision, but is continuing to seek money while it awaits final ruling. Handleman said it was confident that appeals court would rule in Kmart’s favor and it wouldn’t have to repay money. Handleman Chmn.-CEO Stephen Strome said in statement that, despite court action, company maintained “strong and continuing business relationship” with Kmart. Shortly after filing for bankruptcy, Kmart announced plan to close 283 stores, move that Handleman said at time would reduce its annual revenue by $35 million.