Sears Could File for Bankruptcy As Soon As This Weekend

Sears appears to be preparing for a long expected bankruptcy filing

Mr. Carr previously served on the board of LightSquared, a telecom company that went through bankruptcy.

Sears Holdings Corp., the struggling USA retailer owned by hedge fund manager Eddie Lampert, is laying the groundwork for a bankruptcy filing as soon as this weekend as it faces a critical debt maturity.

On Tuesday, Sears added restructuring expert Alan Carr as a director, expanding the six-person board to seven.

Sears faces US$134 million of debt maturing on October 15, and Lampert's ESL Investments said in a filing last month that the borrowings coming due were among those creating "significant near-term liquidity constraints" for the company.

The retailer has been losing money and closing stores for years, in part because of an e-commerce boom dominated by companies such as Amazon. But it wasn’t always this way.

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Sears, the struggling department store chain and former iconic American retailer, has reportedly hired an advisory firm to prepare a bankruptcy filing. Mr. Carr also wasn't immediately available for comment. Lampert had told the special committee he would not help the company fund that obligation unless it agreed to his plan, the sources said. The stock had been trading as high as $43 a share as recently as 2015. The stock was recently at 61 cents as investors brace for a potential bankruptcy filing or restructuring.

"I don't think it is an immediate drive to bankruptcy, but clearly the options are limited", said David Tawil, president and co-founder of Maglan Capital, which follows distressed companies. The company has closed hundreds of Sears and Kmart stores and sold pieces of its business, including the Craftsman tools brand. 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. Analysts say it needs to raise about $1.5 billion a year to stay afloat.

He also called on the company to sell off $3.25 billion in real estate and assets. That is up from up from roughly 70 cents in March, when expectations of full repayment were at a low point, but down from around 93 cents on September 24, when ESL proposed its plan to avoid bankruptcy.

Sears shares were down 31 percent at 40.5 cents in afternoon trading in NY, giving the company a market capitalization of just $40 million. The notes traded at around 42 cents a month ago.

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