Kmart consists of the parent company and 37 affiliates and subsidiaries. When it filed bankruptcy, it requested to pay, in full, the claims of all "critical vendors." The request stated that some suppliers would be unwilling to do business in the future if past debts were not paid. To stay in operation, it needed to continue to receive supplies. If it did not receive supplies, its ability to pay other creditors would be further impaired.

1. Assuming a vendor has no long-term obligation would it continue to sell to Kmart if past debts were not paid?
2. Some critics of Chapter 11 contend that firms should be liquidated under Chapter 7, not operate under court supervision. Can you think of the reasons for that argument?