Sears arranges financing for a potential bankruptcy

Business


Sears Holdings has contacted banks in recent days to arrange the financing necessary to file for bankruptcy after 125 years in business, people familiar with the situation tell CNBC.

The so-called “debtor-in-possession” loan, which companies need to have enough liquidity to keep running the business during bankruptcy, is the clearest sign yet that the department store chain may finally file after years of losses and speculation. Sears has a $134 million debt payment due Monday that it previously said it may not be able to cover.

A bankruptcy is not yet definite and still could be averted. Sears’ CEO, Eddie Lampert has kept the company afloat through financial maneuvering and pouring his own money into the company. He may choose again to do so.

His hedge fund, ESL Investments, has also put forward a plan to restructure the company. He’s also put in an offer to buy some of Sears’ remaining key assets through his hedge fund.Though it is unclear whether Sears’ lenders will agree to it.

Lampert, who has a controlling ownership stake in Sears, personally owns roughly 31 percent of the retailer’s shares outstanding, according to FactSet. His hedge fund ESL Investments owns about 19 percent.

Sears has been working with a number of advisers as it weighs bankruptcy, including Lazard and M-III Partners, the latter of which it has been working with for more than two years.

The Journal reported Tuesday that Sears had hired M-III Partners to prepare for a bankruptcy filing that could come as soon as this week.

The sources declined to be named because the information is confidential. Representatives from Sears and M-III did not respond to CNBC’s request for comment.



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