Kmart files for Chapter 11, Ohio filings on the rise

by Casey Clapper
Staff Writer

Kmart Corp. filed yesterday for Chapter 11 bankruptcy, calling for the company’s reorganization. The case is another filing having an effect in Southeast Ohio.

Kmart filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code to address financial and operational challenges. The company, which has 2,114 stores throughout the United States, is looking to emerge from Chapter 11 in 2003, according to the corporate Web site (http://www.bluelight.com).

All Kmart stores are remaining open.

For the region, the impact is part of a trend that has seen business bankruptcy filings increase, especially among smaller businesses.

From 2000 to 2001, bankruptcy filings increased from 11,965 to 15,285 in the 30 counties of the southern district, eastern division, which includes Athens County, said Sandy Eckstein, administrative assistant for the U.S. Bankruptcy Court for the Southern District of Ohio. The state is divided into northern and southern districts.

At least one government official blames the increase of bankruptcy filings on a cold economic climate.

“The increase in the number of bankruptcies filed primarily has been Chapter 7 bankruptcies,” said Alexander Barkan, an assistant U.S. trustee.

For businesses, the economic condition does not look promising anytime soon. Barkan and others partly blame the Sept. 11 attacks and subsequent layoffs.

Athens attorney James Wallace said he has seen an increase in small, locally owned businesses filing for bankruptcy in Athens.

“I’ve had (small business) owners tell me that after Sept. 11, their business decreased,” he said.

To counter the trend, local business owners said knowing how to adapt to changes in the economy is helpful when trying to stay in business.

“It is important to pay attention to things that are happening and figure out how to adjust to it, “ said Kris Cornwell, owner of Cornwell Jewelers, 10 S. Court St.

“Businesses that haven’t found a niche are going to be in trouble since there has been a downswing in the economy. We mainly focus on customer service,” she said. “I think you need to consider the situation and have inventory that meets consumers’ needs.”