Service Merchandise Company, Inc. operates as a jewelry retailer. It offers a selection of brand-name home products and other product lines. As of September 30, 2001, it had 218 stores in 31 states. Its product offerings are marketed to customers primarily through direct mail flyers, newspaper inserts, and radio and television advertising. In March 1999, the company and its subsidiaries filed voluntary petitions with the Bankruptcy Court for reorganization under Chapter 11. The company operates the businesses as debtors-in-possession pursuant to the Bankruptcy Code. In April 2002, the company agreed to sell, to KLA/SM, LLC, the designation rights with respect to substantially all of its real estate assets, including fee properties and leasehold interests.