Kmart holders angry, confused as stock canceled
Wednesday May 7, 12:18 pm ET
By Emily Kaiser
CHICAGO, May 7 (Reuters) - Linda Corriveau of Michigan was frustrated and angry to learn her 300 shares of stock in Kmart are worthless, now that the discount retailer has emerged from bankruptcy and canceled the former common stock.
"Knowing what has transpired with the upper management, I don't think it's fair that the shareholders were left in the cold," she said. Two former Kmart managers have been charged with fraud, and Kmart accuses others of contributing to the retailer's slide into bankruptcy in January 2002.
The old common shares of Kmart Corp. (Other OTC:KMRTQ.PK - News) were wiped out on Tuesday as the retailer emerged from Chapter 11 bankruptcy protection. The company issued new stock in Kmart Holding Corp.(OTC BB:KMRT.OB - News), which is owned by some Kmart creditors but not former shareholders.
More than a dozen former Kmart shareholders have called Reuters to complain about losing their investments. Others said they did not understand what had happened.
A Kmart spokesman was not immediately available to comment. The company had said since January that it intended to cancel the common shares.
Shareholders are usually last in line to receive money from bankrupt companies, and often get nothing.
A handful of shareholders wrote letters to the bankruptcy court in Chicago, asking a judge to stop Kmart from canceling the shares. Their requests were denied at a hearing in April.
"We are being completely shut out of the reorganization for the benefit of all the other creditors," Charles and Celia Cowan of Huntington Woods, Michigan, wrote in their letter.
Michael Finn, a former shareholder from Sarasota, Florida, wrote that wiping out the common stock "would be a stockholder theft that would make Enron and WorldCom blush".
Corriveau, who lives in Leonard, Michigan, and once worked as a Kmart cashier, said she no longer shops at the discount store because of her outrage over losing her shares. She shops at arch-rival Target Corp.(NYSE:TGT - News) instead.
"If Kmart wants to promote goodwill and good marketing practices, maybe they should do something for the former shareholders, such as maybe issuing gift certificates," she said. |
