Delta Galil Industries (Nasdaq:DELT) confirms the news that as a supplier for Kmart it is assured only a portion of Kmart's debt will be repaid, as Kmart, which has filed bankruptcy, may be unable to pay the remainder of the debt.

Kmart's total debt to Delta is $6.4 million, $1.25 million of which is covered by promissory notes, and the rest, $5.15 million, is open receivables. The amount of open receivables Kmart will pay Delta will be set in the bankruptcy proceedings

Leader-DS analyst Uri Hershkovitz yesterday estimated Kmart's debt to Delta at $6 million, and that if the American retailer goes bankrupt Delta will have to write off $3 million to $4 million.

Kmart is Delta's fifth biggest client; sales to Kmart constitute 5.5% of Delta's overall sales.

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If Kmart's bankruptcy is approved, it will launch a cost cutting effort that will include shutting down branches and pressuring suppliers to reduce prices.