Kmart Crumbles Amid Bankruptcy Talk

Wall Street expects Kmart (KM Quote) to die a death of a thousand cuts. Debt-rating cuts, to be precise.

With Kmart's stock plunging for a fifth straight day Tuesday -- the retailer's shares dropped almost 13.7% to $2.45, putting them at mid-1960s levels -- a growing number of people now say bankruptcy may be Kmart's only way out. Heightening the suspense, the company's board was meeting Tuesday to consider its options, raising the prospect that Kmart could declare its intentions as soon as this afternoon.

"I think a Chapter 11 filing is definitely imminent," says Seth Freeman, managing director of EM Capital, a consulting firm that specializes in advising retailers in financial distress. A bankruptcy filing could allow the company to renegotiate leases on money-losing stores and move aggressively to cut costs, analysts say -- two things the red ink-stained company clearly needs to do. ...