Detroit, MI, August 15--A former Kmart chief executive officer, whom the company accused of contributing to its 2002 bankruptcy, has been cleared of wrongdoing in a civil lawsuit filed by the retailer's former creditors, according to the Detroit News.
The newspaper said it obtained a copy of a sealed opinion from an arbitration panel, dated July 25, which unanimously ruled that the Kmart Creditors Trust is not entitled to any damages from former CEO Charles Conaway. The Detroit News said the ruling was scheduled to be made public soon.
The trust was set up toward the end of Kmart's reorganization to protect the interests of creditors and shareholders, with 2 percent of any money recovered earmarked for shareholders who lost their investment when Kmart's stock was canceled.
Kmart, which emerged from bankruptcy in 2003, has since acquired Sears, Roebuck and Co., and the combined company is called Sears Holdings Corp. Sears Holdings spokesman Chris Brathwaite declined to comment.
The trust, which blamed Conaway for $1.7 billion in economic harm to the retailer, sued several former Kmart executives, charging that they drew hefty salaries and enjoyed perks including trips on luxury corporate jets while the company was limping toward bankruptcy.
The panel found that Conaway "acted at all times in good faith and in what he believed to be the best interests of Kmart," the newspaper said, quoting the panel's decision.
