Sears Holdings has been readying to file bankruptcy that could come this seek says a report by the Wall Street Journal on Tuesday. The report cited individuals who were familiar with what was taking place.
The report said Sears Holding hired M-III Partners to aid with the bankruptcy proceedings. M-III has worked with Sears for over two years, said no source. Sears has kept that confidential said the source. Sears enlisted several advisors over the past few years, as it battles with a huge debt-load.
This news arrives as the retailer is facing a debut payment of $134 million on October 15, which Sears Holding has warned that it might not meet.
Sears representatives and those from M-III did not respond to requests to leave comments.
On Tuesday, Sears said that it added Alan Carr a restructuring expert to its board, approximately one year after Bruce Berkowitz a longtime investor with Sears stepped down from his seat on the board.
A filing for bankruptcy protection would cap several years of effort by Sears CEO Eddie Lampert to maintain the retailer afloat by continually stripping assets out.
Lampert, who owns a controlling stake of Sears, personally has 31% of the outstanding shares of the retailer. ESL Investments, a hedge fund owned by Lampert, owns approximately 19%.
However, it appears Lampert’s time is running out. Analysts say the retailer would have to generate over $1 billion per year to keep in operation, as sales continue to slide.
Earlier in 2018, Lampert released a new restructuring proposal through the hedge fund after mentioning fears over Sears’ ability to pay the upcoming Monday payment. However, after years of selling real estate and assets off, Sears has been left with little or no collateral it can offer its lenders.
It is not clear if the current debt-holder would continue supporting Sears’ restructuring efforts.
The longer the retailer waits to fill bankruptcy, the more its assets will decline, said one analyst. In the meantime, Sears is heading toward the crucial annual holiday season, during which it has to have sufficient confidence from its vendors to agree to fill its shelves with product even as rumors of bankruptcy loom.
In the end, until Sears actually does file for bankruptcy the power remains for the most part in the hands of Lampert.