Judge Okays Kmart Payment to Weyerhaeuser

A U.S. Bankruptcy Court judge gave Kmart Corp. approval to pay Weyerhaeuser Paper.

Judge Susan Pierson Sonderby, chief judge of the U.S. Bankruptcy Court for the Northern District of Illinois, approved a $6.4 million payment to Weyerhaeuser Co., which holds a garbage hauling contract for Kmart's 2,100 stores nationwide.

Weyerhaeuser agreed to let Kmart hold back $1.677 million of the payment until the retailer emerges from bankruptcy and also let Kmart cut to 30 days from 90 days the notice it must give Weyerhaeuser if it wants to end the contract.

The decision, made Feb. 14th, follows Weyerhaeuser’s earlier request to break its $2 million a month contract. The paper company, according to court documents, asked a federal bankruptcy court to break its $2 million-a-month contract with the discount chain (See Related Story).