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CHICAGO - After a bankruptcy court judge yesterday denied two key motions that could have overturned Kmart's attempt to emerge from bankruptcy at the end of the month, the beleaguered chain today must convince Judge Susan Pierson Sonderby to reject more than 170 objections filed by creditors as the final hurdle of the 15-month proceedings.
Yesterday, Sonderby denied emergency motions from disgruntled creditors seeking to postpone the hearing on Kmart's bankruptcy exit plan, setting the stage for today's session to confirm the company's plan of reorganization.
Objections to the reorganization plan came from a variety of sources, including local authorities, landlords, banks, and suppliers, many of them seeking to ensure Kmart will pay its debts or trying to secure more money for their claims.
If its reorganization plan is denied or protracted, Kmart stands to lose the support of its two biggest investors and a $2 billion exit-financing package, according to Kmart's top attorney, Jack Butler.
Kmart's bankruptcy exit plan calls for two major creditors - ESL Investments Inc. and Third Avenue Trust, which would control four of nine seats on the company's board - to invest about $300 million in exchange for more than half of the stock in the reorganized company.
The hearing was set to begin at 10:00 a.m. in Chicago.