Kmart goes into Chapter 11

This still leaves the chain with approximately 1,500 stores, located in every U.S. state except Alaska. About 30,000 Kmart employees are expected to lose their jobs because of the store closings. Kmart’s photofinishing sales last year generated $120 million in revenue and $49 million in gross profit, and the company says photofinishing is important to maintain customer traffic. Kmart has filed a lawsuit against Kodak, saying Kodak owes it $48 million in incentive, advertising and marketing payments under the terms of the companies’ contract. For its part, Kodak says it won’t resume the photofinishing agreement with Kmart because Kmart did not install fixtures as agreed, because Kmart "has systematically pirated film from the Kodak drop boxes," and because Kmart did not install as many minilabs as promised – Kodak says Kmart is about 1,000 minilabs below the agreed-on number. Kmart also owes Kodak about $38.6 million, Kodak says.

To avoid losing customers, Kmart will conduct a nationwide marketing campaign designed to

redirect consumers from Kmart stores being closed to the nearest stores remaining open. The

"Savings Are Here To Stay" promotion includes $150 coupon savings books (which include

savings up to $5 on Kodak photo processing), a series of $500 shopping sprees, and maps and address information for the nearest open Kmart stores in every shopping bag. Kmart recently filed its reorganization plan, which proposes a turnaround funded largely by two investors, ESL Investments Inc., a hedge fund owned by millionaire Edward Lampert, and Third Avenue Trust. The two firms will invest $293.4 million in exchange for Kmart stock.