Just weeks ago, Sears chief executive Eddie Lampert devised a last-minute plan to save the retailer. The committee is concerned it will be opening the company up to litigation, one source said. But if Sears is now in touch with banks to secure the financing needed for a bankruptcy filing, as CNBC reported Wednesday morning, that could send the surest signal yet that such a move may not be far off. It operates a network of stores with 866 full-line and specialty retail stores in the United States as of August 4, operating through Kmart and Sears.
Sears shares were down 27 per cent at 43 cents.
Sears, which was the world's largest retailer in the 1960s, has been struggling in recent decades, in the face of declining foot traffic at its brick-and-mortar stores as online shopping gains popularity.
The Hoffman Estates, Illinois-based retailer, once an iconic American retail brand, has posted seven straight years of losses, while its sales have not grown since the 2008 financial crisis.
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Last month, ESL Investment, the hedge fund owned by Lampert, urged the retailer to sell $1.5 billion more in real estate and restructure $1.1 billion in debt to avoid bankruptcy, according to the filing with the Securities and Exchange Commission. Lampert is the company's biggest shareholder.
A $134-million debt payment that Sears has to meet on Monday has added pressure on both Lampert and the special committee to find a resolution.
In May, Sears said it plans to shut 72 locations by the end of third quarter to stem losses in the face of deepening financial distress. The company is now $5.6 billion in debt, has closed more than half its 2,000 stores since 2004, already sold off most of its major brands, and has seen its shares reduced to penny stock status within the past few weeks.
Sears acquired discount chain Kmart in an $11 billion deal engineered by Lampert in 2004. Sears wants to reduce its debt load by 80%, hoping creditors will bite at the chance to make a deal while the company is still a going concern. While the SPDR S&P Retail ETF (XRT) is up 6.5% year to date, and fellow department stores like Macy's (M), Kohl's (KSS), and Nordstrom (JWN) have climbed more than 30% since the start of the year, Sears has lagged-and how.