Capital Factors Inc. wins US District Court judge’s support in objecting to critical vendor payments by Kmart


Whether Kmart Corp. should have paid several suppliers in the days after its bankruptcy filing has fuelled a legal fight between the retailer and one of its creditors.

This week, a U.S. District Court judge in Chicago sided with creditor Capital Factors Inc., which complained about Troy-based Kmart's January 2002 decision to pay more than $250 million to certain suppliers before its bankruptcy was complete.

Only one local company was included in that group. Troy-based Handleman Co. received about $64 million from Kmart.

On Thursday, Kmart officials said the company plans to appeal U.S. District Judge John F. Grady's decision.

Officials said the ruling would not stop Kmart's plan to emerge from bankruptcy protection. Kmart will appear in a federal bankruptcy court next week to confirm its reorganization plan. If approved, the company could emerge by April 30.



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