(March 18)LEWISVILLE, Texas — The shots continue to be fired in the battle between bankrupt retailer Kmart Corp., Troy, Mich., and a large grocery wholesaler that news reports say may be trying to avoid bankruptcy itself.

Kmart March 17 dismissed a $1.4 billion claim filed by Fleming Cos. Inc., Lewisville, as being “artificially inflated.”

Fleming, in its March 4 prepetition claim, is seeking payments for profits it contends it would have earned under its discontinued supply contract.

Kmart, however, stated the deal didn’t include any minimum purchase requirements and that Fleming’s claim should be no higher than $190 million.

Fleming, meanwhile, has hired a New York boutique investment bank to help it work with creditors and steer clear of declaring bankruptcy protection, according to a March 14 Reuters report. The report said Fleming has hired Gleatcher & Co., an independent financial advising company that helps companies negotiate debt and locate new financing sources.

Fleming has been struggling with a nearly $2 billion debt.

Fleming says its claim includes payments to third parties that Fleming continues to make on Kmart’s behalf.

The Kmart objection is only the latest crisis affecting Fleming.

As part of Kmart’s bankruptcy case, Kmart and Fleming Feb. 3 agreed to end Fleming’s exclusive grocery supply contract. The five-year deal had Fleming supplying all of Kmart’s food, consumables and core pantry products.

Soon afterward, Fleming announced a reorganization that closed distribution centers and laid off 1,800 workers. The realignment came the same day that Fleming announced the Securities and Exchange Commission had intensified its investigation into Fleming’s vendor trade practices and earning statements.

Fleming then ousted its chairman and chief executive officer Mark Hansen March 4.

On March 12, an independent credit rating agency cut its rating on Fleming senior debt to “C,” one step above the agency’s lowest grade, “CC,” according to news reports.

Egan-Jones Ratings Co. officials stated their concern is that suppliers won’t ship without advance payment and supermarkets are shifting more of their orders to other suppliers.