In the Matter of Kmart Corp

question 38

Multiple Choice

In the Matter of Kmart Corp., where some creditors objected to the bankruptcy judge decision that "critical vendors" were to be paid first so that the store might stay in business, the appeals court held that the decision of the bankruptcy judge was:

• A) the record showed the prospect or benefit to the other creditors, which is necessary to allow the preferential payment of one class of creditors and so the critical-vendors order could stand
• B) the creditors who objected were unreliable and so should not be paid
• C) the record did not show the prospect or benefit to the other creditors, which would be necessary to allow the preferential payment of one class of creditors but the critical-vendors order could stand anyway
• D) the record showed the prospect or benefit to the other creditors, which is necessary to allow the preferential payment of one class of creditors, but the critical-vendors order could not stand due to the special circumstances of the case
• E) none of the other choices are correct

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Definitions:

Manufacturers

Companies or individuals that produce finished goods from raw materials through the use of tools, human labor, and machinery.

Cost-Cutting Initiatives

Measures implemented by an organization to reduce expenses and improve financial efficiency.

Market Share

The percentage of an industry's total sales that is earned by a particular company over a specified time period, indicating the company's size and competitiveness in the market.

Diversifying

The strategy of expanding or varying products, services, or markets to reduce risk and increase potential for growth.