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Penske, Kmart battle in bankruptcy court

April 8, 2002 at 4:15 PM   |   Comments

CHICAGO, April 8 (UPI) -- Attorneys for Penske Auto Centers faced off with lawyers for Kmart Corp. in federal bankruptcy court Monday as the companies fought over whether to continue auto service at Kmart locations.

Penske wants to liquidate 564 auto centers in 44 states, a venture 36 percent owned by Kmart. Penske tried to close the auto service centers on Saturday after Kmart defaulted on a $5 million payment April 1, but U.S. Bankruptcy Judge Susan Pierson Sonderby issued a temporary restraining order to keep the centers in business.

Kmart is closing 283 stores nationwide and laying off 22,000 employees as it restructures under Chapter 11 bankruptcy protection.

Penske Corp., which owns 64 percent of Penske Auto Centers LLC, claims the centers are broke and should be liquidated.

Kmart said it didn't learn of Penske's imminent shutdown until late Friday and opposes the sudden closing the car care centers, arguing that would undermine confidence in the company's reorganization efforts.

Penske Corp. was founded by former auto racing legend Roger Penske and paid $112 million for a controlling interest the auto centers in November 1995.

Penske Auto Centers had sales of $298 million at 629 stores in 2000.

Topics: Roger Penske
© 2002 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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