Kmart finally headed for the bankruptcy courts this week after its largest supplier withheld shipment of goods until it was paid in cash. Using a $2bn line of credit from a group of banks led by JP Morgan and Fleet Securities, Kmart will carry on running the business while it restructures under Chapter 11. The company is expected to axe several thousand staff and close a tranche of stores in an attempt to cut costs. The writing appeared to be on the wall for the Michigan based discounter after a combination of dire Christmas sales, a profit warning, and the departure of chief operating officer Mark Schwartz sent shares plummeting to an all time low last week. Analysts said the prospects remained bleak for Kmart given the current economic climate and the tough competition from Wal-Mart, which has superior buying power and a more efficient distribution operation. Kmart is the number two general merchandise retailer in the US behind Wal-Mart, with over 2,100 stores, making the bankruptcy the largest in US corporate retail history. Kmart's biggest suppliers moved quickly to reassure investors that Kmart's financial woes would not materially damage their own businesses. Fleming said its seven-day invoice and payment cycle for shipments to Kmart limited its exposure, while stores Kmart was likely to close ­ the most unprofitable 10% ­ represented less than 6% of Fleming's business with Kmart. Procter & Gamble said Kmart's reorganisation would have no material effect on its business. {{NEWS }}