NEWSWIRE - January 23, 2002

Topic: Bankruptcy and Reorganization

Source: "Kmart Lays Out Plans to Trim its Size, Increase Efficiency in Bankruptcy Filing," by Amy Merrick, Wall Street Journal, January 23, 2002, page A3.

Synopsis of Article: The article discusses the decision by Kmart to seek bankruptcy protection in order to give it time to reorganize into an economically viable entity. The article provides an opportunity to discuss what it means to file for bankruptcy, what events led up to Kmart's filing, and the costs and benefits of being in bankruptcy.

Questions and Teaching Note:

1. What options does a company have when it files for bankruptcy?
2. What factors led to Kmart's filing for bankruptcy?
3. What are some of the costs to Kmart of being in bankruptcy?
4. What does Kmart gain from being in bankruptcy?

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