Cases & Deals

Kmart Creditor Trust obtains settlements from former Kmart officers and auditors

Client(s) Kmart Corporation Financial Institutions' Committee

Jones Day represented the Kmart Creditor Trust in a series of arbitration proceedings against six executives who led Kmart before it filed for bankruptcy in 2002. In January 2002, Jones Day was retained to represent the Official Financial Institutions' Committee for Kmart Corporation involving over $10 billion in debt. Kmart became the largest retailer ever to file for chapter 11. During Kmart's bankruptcy, a massive investigation was launched concerning alleged wrongdoing at the company related to accounting and stewardship issues. That investigation was still ongoing at the time Kmart emerged from bankruptcy. Under the chapter 11 plan, responsibility for investigating and pursuing accounting- and stewardship-related claims against Kmart's former officers and its auditor, PricewaterhouseCoopers, was assigned to the Kmart Creditor Trust.

In November 2003, Jones Day filed suit on behalf of the Kmart Creditor Trust against six former senior Kmart officers and PricewaterhouseCoopers. The officer litigation then proceeded to separate arbitrations. Each of these proceedings was resolved by November 2005, with the Trust obtaining multi-million dollar settlements from a group of the officers and a separate settlement from PricewaterhouseCoopers.

Kmart Creditor Trust v. PricewaterhouseCoopers L.L.P., No. 03-054233-CZ (Oakland Cty. Cir. Ct., Mich.); Kmart Creditor Trust v. Charles C. Conaway (AAA); Kmart Creditor Trust v. Mark S. Schwartz (AAA)