TROY, Mich. (April 10, 2002)—Penske Corp., Penske Auto Centers Inc. and Penske Auto Centers L.L.C., have agreed to work together with Kmart in liquidating Penske's 563 auto centers in 44 states. This after several days of negotiations, restraining orders and court injunctions.
The agreement, subject to the issuance of a signed order by the U.S. Bankruptcy Court for the Northern District of Illinois, calls for Penske and Kmart to cooperate on “an orderly wind-down of the business,” following Penske´s decision to close the business April 6, a Kmart press release said.
Penske, according to the agreement, has earmarked funds for certain close-down expenses, including facility restoration, removal of hazardous waste and materials associated with the closures, and monies to support Penske Auto Centers customers' future warranty needs, Kmart said.
Penske Corp. has approved funding Penske Auto Centers' payment of approximately $10 million for salaries, severance and future medical expenses of PAC employees, Kmart said. Penske also has agreed to pay $6 million to Kmart under the terms of a master lease guarantee, and Penske Auto Centers L.L.C. also has agreed to waive a claim of $5 million that allegedly was owed as a result of Kmart´s previously announced store closing plan.
“This agreement allows us to meet our primary objective of taking care of our employees and customers,” Roger S. Penske, Chairman of Penske Corp., said in a statement.
The sides will create a liquidation plan and are to submit it to the bankruptcy court on Thursday.
Calls to Penske for comment were not immediately returned.