Beleaguered convenience store operator Kmart and its former food distributor Fleming have reached a claims settlement that calls for Kmart and an investor to pay US$37m in cash to Fleming on 28 March.
In a filing with the US bankruptcy court in Chicago, Kmart said it has reached a settlement to allow Fleming $385m of a $1.47bn prepetition claim that Fleming filed earlier this month, reported Dow Jones News.
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Kmart said it was a “reasonable settlement” of Fleming’s claims relating to Kmart’s termination of its contract.
“This amount equates roughly to the costs Fleming would incur over the remaining term of the agreement associated with the absorption of fixed costs and the purchasing synergies not realised,” the filing said.
Under a reorganisation plan filed by Kmart in January, Fleming and other trade vendors will be awarded around 10% of the value of their prepetition claims in the form of stock in the reorganised Kmart.
Kmart said that ESL Investments had agreed to buy Fleming’s anticipated stock in Kmart for an amount that is “less than” the projected value of that stock. The cash amount was reported to be $22m.
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By GlobalDataThe settlement will also result in a cash payment by Kmart to Fleming of $15m in administrative claims.
