Bankrupt Kmart Corp. (KM) is investigating the way the company was managed under former chief executive Charles Conaway, and has suspended severance payments to several former executives. 

The severance pay suspension does not apply to Conaway, who resigned in March and received $4 million as part of his separation agreement, Kmart spokesman Michael Freitag said Thursday.

The investigation focuses on what the company called the "stewardship" of Kmart by members of its former management team. But Freitag declined comment on whether Conaway is among the executives under scrutiny, and would not disclose the problems being reviewed.

Kmart has been investigating its accounting methods for weeks, saying only that the inquiry relates to vendor payment and rebates, and general liability reserves. Further details of the accounting investigation will be included in Kmart's 10K annual financial statement filing, scheduled for release on May 15.

Both reviews were started because of an anonymous letter, claiming to be from employees, that Kmart received in January raising concerns about accounting irregularities and other issues.

Company investigations of former managers usually focus on whether the executives protected the best interests of the company, its shareholders and employees, said Burt Flickinger, III, managing director of Reach Marketing, a retail consulting company based in Westport, Conn.

Flickinger said Kmart made highly questionable business moves by trying to compete with rival Wal-Mart Inc. with aggressive discounts and placing heavy financial burdens on suppliers to increase profits.

"The previous management team collapsed a financially healthy company faster than any other retail chain in recent history," Flickinger said.

Conaway resigned in March amid sweeping management changes after the company filed for bankruptcy protection on Jan. 22, listing $16.3 billion in assets and $10.3 billion in debt. He was stripped of his title as chairman before the bankruptcy filing, the largest by a retailer in U.S. history.

The company's president and chief operating officer, Mark S. Schwartz, and chief financial officer John T. McDonald Jr., were among the top executives who left Kmart in January shortly before the bankruptcy filing.

Efforts to reach Conaway, McDonald and Schwartz Thursday night were unsuccessful.

James Adamson, who had served on the Kmart's board, replaced Conaway, and is spearheading the company's restructuring in bankruptcy.

On Wednesday, Kmart said that it had asked for an extension from the Securities and Exchange Commission to file its annual 10K financial report, saying the new management needed more time to examine the company's accounting. The 10k was originally due on Tuesday.

Kmart also revealed that its operating results for the year ended Jan. 30 were expected to include a loss "significantly higher" than the $244 million loss reported for the previous fiscal year.