TROY, Mich., Jan. 20 (UPI) -- Kmart Corp. has replaced Chief Executive Officer James Adamson with company President and Chief Operating Officer Julian Day in a senior-level management change as it seeks to emerge from Chapter 11 bankruptcy by the end of April.
Adamson will remain with the company as non-executive chairman of the board of directors, a post he has held since last year after serving as a director since 1996. The sudden management change was made Sunday afternoon by the Troy, Mich.-based retailer which last week announced plans to close 326 stores and layoff 35,000 to 37,000 workers as it struggles to reorganize to compete with Wal-Mart and Target Corp.
Adamson took over at Kmart from Charles Conaway in January 2002 when the discount chain filed for bankruptcy protection, closed 283 stores and fired 22,000 employees.
Kmart will have closed more than 600 stores, leaving about 1,500, by the time it emerges from bankruptcy.
Kmart plans to submit a 5-year reorganization plan to a U.S. bankruptcy court judge in Chicago by Thursday, which would set up a trust to pay creditors but leave existing stock valueless. The company plans to issue new shares to creditors.
"While the company struggled to address significant challenges this past year, Kmart is positioned to emerge from Chapter 11 in April with a stronger balance sheet and liquidity position," said Day, who previously worked for Sears, Roebuck & Co. and Safeway Inc.
"We have regained the confidence of lenders, creditors and critical vendors, securing needed financing during the Chapter 11 reorganization and, most recently, a new $2 billion exit financing commitment"
Adamson, who may receive partial payment of a $4 million bonus he was in line for if the company emerged from Chapter 11 by July, reportedly had been grooming Day to succeed him.
"It was always the plan," Kmart spokeswoman Lori McTavish told Monday's Detroit News.
Last Friday, Kmart fired the last five employees that had accepted retention loans from former management and asked 25 ex-senior executives to repay the money. Former CEO Conaway and other top managers received a combined $28.8 million in loans and the company may go to court to recovery the money.
The Justice Department and the Securities and Exchange Committee are investigating the loans, which ranged from $300,000 to several million dollars. Conaway received a $5 million payment and former president and chief operating officer Mark Schwartz $3 million.