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Sears reportedly preparing for bankruptcy filing as soon as this week

Category: Finance,Retail

Sears Holdings is readying a bankruptcy filing that could come as soon as this week, the Wall Street Journal reported on Tuesday citing people familiar with the situation.

The embattled department store chain has hired M-III Partners to work on a potential filing, the people said. They also added Sears is still considering other options and could move to an in-court restructuring.

A representative from Sears didn't immediately respond to CNBC's request for comment.

The news comes as the retailer has $134 million in debt due this Monday.

A bankruptcy filing would cap years of efforts by CEO Eddie Lampert to keep the company afloat by steadily stripping out assets. Earlier this year, Lampert put forward a restructuring proposal through his hedge fund, ESL Investments, after flagging it had an impeding debt payment it may not reach.

It has been unclear whether Sears' current debtholders will continue to support these efforts, which have amounted effectively to restructuring outside of formal bankruptcy proceedings.

Those debtholders must be convinced that Sears is worth more than the value of its assets — namely its real estate and its brands — despite its constant losses. The longer Sears waits to file for bankruptcy, the more the value of its assets arguably decline.

Lampert, who has a controlling ownership stake in Sears, personally owns roughly 31 percent of the retailer's shares outstanding, while ESL owns about 19 percent.

This is breaking news please check back for updates.


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