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The Bankruptcy Hotline

By ALM Staff | Law Journal Newsletters |
November 29, 2004

Certiorari Denied in Kmart Case

The Supreme Court has declined to consider the much debated critical vendor issue, letting stand a Seventh Circuit ruling that Kmart had no authority to pay certain suppliers that it had not proved were critical to the retailer's operations. The Court's denial of certiorari in the Kmart case leaves the lower courts split as to whether Chapter 11 debtors can immediately pay in full the pre-petition claims of critical vendors. The Seventh Circuit cases at issue here are Irving Pulp & Paper v. Capital Factors, 04-181, Knight-Ridder v. Capital Factors, 03-1581, and Handleman Co. v. Capital Factors et al, 03-1583.

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