Sears Holdings Corp is preparing to file for Chapter 11 bankruptcy protection as early as Friday, sources said on Wednesday, casting doubt over the future of what was once the world's largest retailer. Sears' acting spokesman, Howard Riefs, said Brathwaite had informed the retailer of his exit last month. The stock is down some 90% in 2018, and just keeps falling. CNBC first reported on the debtor-in-possession financing talks, while the Wall Street Journal first reported on Sears' bankruptcy preparations. Neither Sears nor M-III Partners immediately returned requests for comment.
That may be bad news for Sears shareholders that have hung on this long, but some malls are likely breathing a long-awaited sigh of relief, writes Wells Fargo's Jeffrey Donnelly.
Restructuring through a bankruptcy filing may not solve Sears' underlying problems, which include lost market share and disillusioned customers, Saunders noted. The company added a new director who is familiar with bankruptcies and restructuring.
Shares of Sears (SHLD.O), an iconic American retail brand which traded above $100 a decade ago but have fallen to less than $1 in the past year, were down at 41 cents in trading before the bell. Sears warned it could go out of business as it waits for approval from the committee on the deal.
The Hoffman Estates, Illinois-based retailer has posted seven straight years of losses and its sales have not grown since the 2008 financial crisis. Sears' borrowings totaled $5 billion as of August 4.
Sears Holdings is preparing for a possible bankruptcy even as CEO Edward Lampert continues his push to shrink the once-dominant retailer back to profitability.
Lampert also expects that Sears could get more value for its assets by selling them while it is a going concern, the newspaper added.
Lampert has invested and lent to Sears many times over the years, making him and his hedge fund the company's largest shareholders with a stake just shy of 50 percent, as well as its biggest creditor, with about $2.5 billion owed to him or funds he controls.