Reports circulated that the company is talking to advisers and banks in preparation for a bankruptcy filing. It still has nearly 900 stores, and its stocks bounced upward previous year when the retailer announced a partnership with Amazon to install auto tires bought online. The Journal also reported the billionaire Lampert, who has rescued the company in the past, could make the payment to avert an in-court restructuring.
Investors are giving up hope on a deal.
The committee has been resisting the plan amid concerns that creditors and shareholders would sue over it being too favorable for Lampert. Sears' borrowings totaled $5 billion as of August 4. For example, he recently offered to buy its Kenmore appliance brand for $400 million.
"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.
Sears shares were down more than 28 percent in early morning trading Wednesday.
The company separately said it named restructuring expert Alan Carr to its board of directors.
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The Wall Street Journal late on Tuesday said Sears had hired boutique advisory firm M-III Partners LLC to help it prepare a filing before a $134 million debt payment becomes due on Monday, the newspaper said, citing people familiar with the situation.
Sears' and Kmart's chairman, chief executive, largest shareholder and biggest creditor - reportedly is looking for a larger restructuring than just anteing up more cash to bail out the cash-strapped retailers. Talks are under way to arrange debtor-in-possession financing for a bankruptcy filing that could come in the next few days, the source added.
But the retail landscape is littered with out-of-business brands that tried to reorganize in the bankruptcy process and liquidated their businesses instead.
The Wall Street Journal quoted sources saying Lampert wants to restructure and is anxious that a bankruptcy filing will lead to a liquidation, which has happened with so many retailers, the most recent being Toys R Us.
Sears, which was the world's largest retailer in the 1960s, has been struggling in recent decades, in the face of declining foot traffic as brick-and-mortar stores struggle to compete with online stores led by Amazon.com. The retailer closed its last Sears store in Chicago in July and has announced plans to close another 46 stores by November, including a Kmart in Steger and a Sears in Bloomington. The same day, the company revealed that a major shareholder had dumped 142,000 shares this week for only 59 cents to 65 cents a share.
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.