Sears prepares for potential bankruptcy

Sears Holdings has hired an advisory firm to prepare a bankruptcy filing amid crippling debt and major store closures.

M-III Partners LLC was hired to prepare the filing that could come as early as this week, according to anonymous sources cited in the Wall Street Journal.

Despite the preparation, Sears continues to explore other options to stave off bankruptcy, including selling off some of its brands, closing unprofitable stores and restructuring without filing for bankruptcy, according to a proposal submitted by Sears Holdings CEO Eddie Lampert’s hedge fund ESL Investments last month.

A source told the Wall Street Journal that the company is struggling to get support from lenders for the proposal based on poor financial performance.

About $134 million in debt is due Monday. Lampert, who manages the hedge fund, could pay the bill and keep the company afloat as he has done in the past, but in previous blog posts, he has said he plans to look at alternatives to maintain value for investors.

Sears still has 900 stores, but has announced round after round of closures in recent years. Most recently, the company announced plans to shutter 46 stores, including the store at the Dayton Mall in November.

It also announced that it would close the Mall at Fairfield Commons store shortly after in December. A Sears store in Springfield remains open.

— HOLLY SHIVELY