Sears prepares to file for bankruptcy in coming days

Sears store in Garden City NY. REUTERS  Shannon StapletonMore

Sears store in Garden City NY. REUTERS Shannon StapletonMore

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.

On Wednesday, Sears stock tumbled 30% to 41 cents, after the Wall Street Journal reported that it hired advisors to prepare it for a bankruptcy filing.

Sears did not immediately respond to a request for comment. The Journal also reported the billionaire Lampert, who has rescued the company in the past, could make the payment to avert an in-court restructuring. Sears's poor performance has always been an issue for owners, but landlords are split between those that are likely cheering the possibility of reclaiming its locations for more profitable tenants and those that see its potential bankruptcy as a negative tipping point. The company is now $5.6 billion in debt.

The committee has been resisting the plan amid concerns that creditors and shareholders would sue over it being too favorable for Lampert.

But the retail landscape is littered with out-of-business brands that tried to reorganize in the bankruptcy process and liquidated their businesses instead. But it has struggled to reinvent itself in the face of online competition from companies such as Amazon.com Inc (AMZN.O), as well as from other brick-and-mortar retailers, including Walmart Inc(WMT.N).

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But many flailing retailers have tried that tactic before and failed (see: Toys "R" Us).

Lampert's efforts to keep Sears out of bankruptcy have included shedding hundreds of unprofitable stores: Sears and Kmart had some 3,500 locations when they merged under Lampert in 2005; now there are about 900 nationwide. The retailer closed its last Sears store in Chicago in July and has announced plans to close another 46 stores by November, including a Kmart in Steger and a Sears in Bloomington.

The company has taken a number of steps in recent days to prepare for a filing.

Sears and Kmart had 89,000 employees as of February 3 of this year, according to a company filing. It has lost $11.7 billion since 2010, its last profitable year.

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