A bankruptcy court judge has denied emergency motions from two creditors that could have disrupted Kmart’s bid to emerge from bankruptcy protection this month.

Following a lengthy court battle regarding more than US$300m Kmart paid to key suppliers soon after declaring bankruptcy in January 2002, Judge Pierson Sonderby denied emergency motions from two creditors seeking to postpone the hearing on Kmart’s bankruptcy emergence plan, reported Reuters.

The beleaguered convenience store operator said earlier that most of its creditors had accepted the reorganisation plan but it still need court approval. Kmart said it still expected to emerge from bankruptcy protection by 30 April.

Yesterday [Monday] two creditors, Capital Factors and Dean Foods, filed emergency motions seeking to block the plan until their concerns had been resolved.

Capital Factors last year appealed against Sonderby’s decision to approve the payments to so-called critical vendors, who are judged to be so important that the company has to pay them straight away to ensure they continue to supply goods.

Last week, US District Judge John Grady reversed Sonderby’s ruling. Capital Factors argued that the hearing to confirm the reorganisation plan should be postponed until the court orders the critical vendor’s money to be repaid and Kmart amends its reorganisation plan.

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By GlobalData

Kmart’s top attorney, Jack Butler, said Grady had not specified whether suppliers should repay the money. He argued that if the bankruptcy exit hearing were delayed, Kmart’s $2bn in financing and deals with key investors could be put in jeopardy.