Updated! Sears is reportedly preparing for a possible Chapter 11 filing as early as this weekend.
According to CNBC, the ailing retail chain has reached out to banks to secure a debtor-in-possession loan. The special financing is used to keep companies afloat while in bankruptcy.
The filing is already being prepared and could come as soon as Sunday, sources told Bloomberg.
But top Sears lenders Bank of America, Wells Fargo and Citigroup, which met with the retailer last night, are instead pushing for a Chapter 7 liquidation, The Wall Street Journal reported.
Word of the activity comes as Sears faces a $134 million debt payment on Monday.
At the same time, the retailer and its beleaguered CEO Eddie Lampert are scrambling to avert a bankruptcy by restructuring. Lampert, through his ESL Investments hedge fund, has proposed a rejiggering of Sears’ debt, and has offered to buy the chain’s most valuable remaining assets, including the Kenmore appliance brand and additional real estate.
And on Tuesday Sears’ board added a new director, Drivetrain CEO Alan Carr, who specializes in “complex financial restructurings,” the company said.
“Alan brings deep experience as a director for companies that went through complex organizational change,” Lampert said in a statement. “We are pleased to welcome him to the board and look forward to the benefit of his expertise as we work to maximize value for the company and its stakeholders.”
Sears has not had a profitable year since 2010, and last quarter lost $508 million. Now, as the make-it-or-break-it holiday selling season approaches, three vendors, including bicycle maker Kent International, told Reuters that the retailer has failed to make scheduled payments within the last two weeks.
Sears’ departure would put some $3 billion in majap sales in play, according to TWICE’s Top 50 Major Appliance Retailers report. Big-box retailers with similar sales-assisted sales floors would likely grab the lion’s share of Sears’ sales volume and customer base, although based on major retail failures of the past like Circuit City, much of that revenue is never fully recouped.
In the meantime, it’s seemingly business as usual in other corners of Sears’ corporate headquarters. Last week the retailer held a grand reopening for its nearby Oak Brook, Ill., store, which closed last year and reemerged with a smaller footprint and more contemporary look. The event featured actress and clothing-line eponym Jaclyn Smith; a tutorial by HGTV regular Frank Fontana; a live band; plus games, prizes and raffles, all while the fate of the company hangs in the balance.
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