Sears readies for bankruptcy as soon as this weekend

The long goodbye for America’s most iconic retailer inches closer to an ending.

Sears Holdings Corp., the struggling U.S. chain owned by hedge fund manager Eddie Lampert, is preparing for a bankruptcy filing as soon as Sunday, according to a person familiar with the plan. The company faces a critical debt maturity next week.

The plan to file for Chapter 11 protection is a rebuff to Lampert, whose fund, ESL Investments Inc., is the retailer’s biggest equity holder and a major debt holder. For weeks, ESL had been pushing a debt restructuring proposal that would avoid a bankruptcy filing. The company is now focused on securing financing that would fund operations through bankruptcy, said the person, who asked not to be identified because the discussions are private.

A filing would be the culmination of years of decline as Sears has struggled to adapt to a changing retail environment. It would also mark a stunning downfall for a company that for much of the last century epitomized America.

Sears shares traded for as low as 35 cents in New York, a 94 per cent drop in the past year. The fate of 89,000 employees is unclear.

The company has taken a number of steps in recent days to prepare for a filing. It hired boutique advisory firm M-III Partners LLC, the Wall Street Journal reported. The company separately said it named restructuring expert Alan Carr to its board of directors.

Sears faces US$134 million of debt maturing on Oct. 15. ESL said in a filing last month that the borrowings coming due were among those creating “significant near-term liquidity constraints” for the company. ESL proposed last month for Sears to refinance its debt and sell real estate to help pay down borrowings.