Penske Corp., which operates auto service centers at more than 560 Kmart Corp. (KM) stores, said in court documents filed Monday that the bankrupt retailer may close an additional 700 stores.

Kmart spokesman Michael Freitag said while there are no immediate plans to close additional stores, "we haven't ruled out closing other stores."

According to the documents filed in U.S. bankruptcy court in Chicago, "Representatives of Penske Corp. were informed by representatives of Kmart Corp. of Kmart's plan to close as many as 700 additional stores ..."

Troy, Michigan-based Kmart, which filed for bankruptcy protection on Jan. 22, has said it would close 283 of its 2,114 stores in its bid to reorganize under voluntary Chapter 11 protection.

Penske and Kmart were in court in Chicago Monday battling over Penske's decision to close more than 500 auto service centers Saturday. Some Penske Auto Centers are located in Kmart parking lots, while others are attached to the retailer's stores.

Kmart is facing its first major skirmish with a business partner that wants to stop doing business with the discount chain.

Kmart sought and won a temporary restraining order Saturday from U.S. Bankruptcy Judge Susan Pierson Sonderby to keep the stores open, but they remained closed Monday as lawyers from both sides appeared in court.

A lawyer for Penske told the court the auto centers employ about 4,000 workers, and many of them had already been laid off. Penske has said Kmart defaulted on a $5 million payment.

Penske Auto Centers is owned 64 percent by a unit of Penske Corp. and 36 percent by Kmart. Penske Corp. bought its stake in the auto-services business from Kmart in 1995.

Shares of Kmart fell 8 cents to close at $1.20, a drop of 6.25 percent, on the New York Stock Exchange Monday.