CHICAGO, April 9 (UPI) -- Penske Corp. is offering outplacement assistance to about 4,000 employees laid off with the sudden closing of 563 Penske Auto Centers nationwide.
Kmart Corp. lost a fight in U.S. bankruptcy court on Monday to keep the auto repair shops at its stores open when a judge ruled it was too late to force the car-repair chain to remain in business while Kmart reorganizes under Chapter 11 bankruptcy protection.
Penske shut down the repair shops on Friday, days after Kmart failed to make a $5 million payment.
Penske attorneys said the auto service centers were losing $3 million a year.
Kmart, the nation's second largest discount retailer, is closing 283 of its 2,114 stores and laying off 22,000 employees -- 63 with Penske auto-repair outlets.
"After the action that was taken late Friday and Saturday, the damage was done," Ron Hutchinson, Kmart's chief restructuring officer, told the hearing.
U.S. Bankruptcy Court Judge Susan Pierson Sonderby ordered Kmart and Penske Corp. to negotiate the liquidation of 563 Penske Auto Centers in 44 states. Penske Corp. paid $112 million for 64 percent of the auto center chain in 1995; Kmart retained 36 percent ownership.
