Sears, once the world’s largest retailer, is now facing bankruptcy — and may file as soon as this week, according to reports.
The company has recently reached out to several banks to prepare for a potential bankruptcy filing, CNBC reported, citing people familiar with the matter.
The Wall Street Journal reported Tuesday that Sears has hired M-III Partners to prepare for an imminent potential filing.
The company, which hasn’t made a profit since 2010, is facing a $134 million debt payment, due on Monday.
After news broke of the potential filing, Sears stock dropped 32 percent on Wednesday, to 40 cents a share.
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CNBC says the bankruptcy filing could still be averted and notes that CEO Eddie Lampert has kept the company afloat in the past with his own money. His hedge fund, ESL Investments, has also proposed restructuring the company.
The news comes a week after Toys “R” Us — another retail giant facing financial problems — appeared poised to make a comeback following a Chapter 11 bankruptcy filing last year. A group of investors said in a bankruptcy court filing Oct. 2 that it was canceling an auction for Toys “R” Us assets, and working on plans to “bring back these iconic brands in a new and re-imagined way.”
USA Today reported that a Chapter 11 bankruptcy filing would give Sears a chance to cut debt and reemerge as smaller, profitable company. But the outlet notes that retail bankruptcies are “risky because many end up in liquidations.”