Grocery Wholesaler Resumes Shipments to Kmart

Grocery supplier Fleming Cos. and some other vendors to Kmart Corp. said Thursday that they have resumed shipments, allowing the discount retailer to restock shelves as it begins rebuilding after seeking Bankruptcy Court protection earlier in the week.

Fleming, Kmart’s sole grocery supplier, said it has received assurances that it will be paid today the $76 million it is owed by Kmart. Other companies that began shipping again included soft drink maker PepsiCo Inc., lawn and garden supplier Scotts Co. and Home Products International Inc., which makes ironing boards, storage containers and other products.

Support from vendors will be a key issue for Kmart as the Troy, Mich.-based company attempts to reorganize under Chapter 11 bankruptcy. Fleming cut off shipments to Kmart last weekend after the retailer failed to make a regular weekly payment. That move played a decisive role in Kmart’s bankruptcy filing Tuesday.

It was “the signal that sent everybody to the loading docks to stop the trucks,” said James R. Tennant, Home Products’ chief executive.

Fleming spokesman Randy Hatcher said Thursday that it will be paid for supplies shipped before the bankruptcy filing because the Bankruptcy Court has deemed it a “critical vendor” for Kmart.

Most Kmart suppliers, however, won’t be so lucky, at least in the short term. They will end up getting checks just for products delivered after the filing, because those are the only payments guaranteed by $2.1 billion in financing Kmart arranged with lenders as part of the voluntary bankruptcy filing.

Not all Kmart suppliers are back on board.

Dorel Industries Inc., a Canada-based maker of car seats, high chairs and other furniture, said it is waiting for additional assurances from company lawyers that it will get equitable treatment from Kmart.

“Our intent, hopefully, is to be shipping next week if everything goes well,” said Jeffrey Schwartz, Dorel’s chief financial officer.

Kmart’s shares closed Thursday at 93 cents, down 4 cents, on the New York Stock Exchange.