Sears hires advisers to prepare bankruptcy filing

Sears appears to be preparing for a long expected bankruptcy filing

Sears appears to be preparing for a long expected bankruptcy filing

On Wednesday, Sears stock tumbled 30% to 41 cents, after the Wall Street Journal reported that it hired advisors to prepare it for a bankruptcy filing.

The company's shares are trading at around 59 cents and are down more than 90 per cent in the last 12 months. Talks are under way to arrange debtor-in-possession financing for a bankruptcy filing that could come in the next few days, the sources added. Even after several rounds of store closures across the country in recent years, the holding company still operates around 500 Sears stores and 360 Kmart stores.

The committee has been resisting the plan amid concerns that creditors and shareholders would sue over it being too favorable for Lampert.

Larry Perkins, founder and CEO of consulting firm SierraConstellation Partners, told the Washington Post on Wednesday that Sears' hiring of bankruptcy experts "is not a sure sign by any means, but it's certainly a leading indicator" that bankruptcy could be on the horizon.

Sears did not immediately respond to a request for comment.

"Alan brings deep experience as a director for companies that went through complex organizational change", said Sears CEO Eddie Lampert, in a statement. Lampert's hedge fund, ESL Investments, offered to buy Kenmore and certain other assets earlier this year.

But many flailing retailers have tried that tactic before and failed (see: Toys "R" Us).

If Sears were to file for bankruptcy, its financial performance during the upcoming holiday season could prove crucial in determining its future, according to the sources. The stock, which traded above $100 a decade ago, has fallen to less than $1 in the past year.

Sears had previously said there was "substantial doubt" the company would be able to stay in business and sustain as online sales and chains such as Walmart continue to take over the market.

Lampert, who for weeks has been pushing a debt restructuring proposal that would avoid a Chapter 11 filing, is now focused on a deal that would preserve stakeholders' value in a court restructuring, according to a person with knowledge of the matter.

Sears has more than $11 billion in cumulative losses since 2011, and its annual sales have dropped almost 60% in that period to $16.7 billion, according to Dow Jones.