The handwriting is on the wall: Sears appears to be nearing bankruptcy. The company also has $269 million available to it from lenders, according to figures it released on September 13.
Sears had been drowning in debt and reportedly could not afford a $134 million repayment that had been due on Monday. The company said it is continuing to pay employees' wages and benefits and is working with its vendors to ensure its shelves remain stocked.
The bankruptcy filing is expected in NY early Monday, according to the sources. Lampert personally owns 31 per cent of the company's shares, while his hedge fund has an 18.5 per cent stake, according to FactSet.
Three companies that sell items at Sears told Reuters this week that Sears had missed payments to them over the past few weeks.
One of Sears' major shareholders just dumped a chunk of his stock for pennies on his original investment. The company added a new director this week who is familiar with bankruptcies and restructuring.More news: NBC Forced to Issue Correction on Trump's 'Robert E. Lee' Comments
Given its sheer size, Sears bankruptcy filing will have wide ripple effects on everything from already ailing landlords to its tens of thousands of workers.
Sears was making progress in its negotiations with banks on Friday for financing to keep it afloat through the holiday season while in bankruptcy court, with lenders expected to provide several hundred million dollars, the sources said. Usually, funding is secured well before the final days.
Lampert has been willing to pour additional cash into the company in return for debt backed by real estate or other hard assets.
Sears expects liquidation sales to begin shortly.
The company said it intends to stay in business through stores that are profitable and its online shopping sites, reported CNN.More news: Raiders Are Shopping Amari Cooper In a Trade
According to Bloomberg, Sears could declare Chapter 11 bankruptcy as early as Sunday, as the October 15 maturation date of a $134 million debt package looms large. It could attempt to emerge as a profitable company. But the retail landscape is littered with brands that tried to reorganize in the bankruptcy process and liquidated their businesses instead, such as RadioShack, Toys "R" Us and Sports Authority. It did not specify whether the closings would be Sears or Kmart stores or their locations.
As of May, it had fewer than 900 stores, down from about 1,000 at the end of a year ago.
The beleaguered 125-year-old retailer, once the largest in the United States, hopes to sell stores and other assets, including its Kenmore appliances brand and home services business, in court-supervised auctions while under bankruptcy protection, the sources said.
Such financial woes contrast with the promise that Lampert made when he combined Sears and Kmart in 2005, two years after he helped bring Kmart out of bankruptcy.More news: Britain, France, and Germany Demand Probe Into Journalist's Disappearance in Saudi Consulate