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Judge Approves Bluelight.com Sale

A judge in the U.S. Bankruptcy Court in Chicago approved the buyout of Bluelight.com assets to United Online Wednesday evening for $8.4 million.

Officials at Bluelight.com, the Internet service provider (ISP) arm of bankrupt retail giant KMart , were pleased at the ruling and the resolution of several filings from organizations opposed to the sale.

"The objections from Microsoft and the two states were resolved before the actual hearing," said Abagail Jacobs, a spokesperson at KMart. "The objection by the banks was overruled."

A group of lenders, led by J.P. Morgan, didn't want KMart to receive the entire $8.4 million from the sale, saying the money should be used to help pay back the $2 billion loan floated shortly after KMart filed for Chapter 11 bankruptcy.

According to KMart, they had an administrative claim on Bluelight.com, which they said took precedence over J.P. Morgan's claim. The judge presiding over the case agreed, they said.

In the case of Microsoft, KMart agreed to detail which licenses would be transferred to United Online.

Peter Delgrosso, a United Online spokesperson, said the company wouldn't release any of the details of the Bluelight.com migration until after the deal closes. He stressed moving customers would not see any lapse in service.

At issue is whether Bluelight.com's 165,000 customers will see a price increase after moving to United Online, or whether the price will be "grandfathered" until current service contracts expire.

While customers will still be using a branded Bluelight.com service, management and control over the account will be handled by United Online, which charges its own users $9.95 a month. Bluelight.com charges $8.95.

Correction: In an earlier version of this story, Peter Delgrosso was paraphrased as saying moving customers would "hopefully" not see a lapse in service. Delgrosso did not use the word "hopefully."