Sears Could Be One Step Closer To Bankruptcy

Struggling retailer Sears Holdings Corp SHLD is reportedly one step closer towards filing for bankruptcy after being in business for 125 years.

What Happened

Sources close to the situation told The Wall Street Journal the parent company of Sears and Kmart hired the services of M-III Partners, a boutique advisory firm with expertise in bankruptcy proceedings. In fact, M-III Partners may have already been working on a potential bankruptcy filing over the past few weeks. The sources said M-III Partners staff were seen at Sears' headquarters.

Sears holds $134 million worth of debt, which is due Monday, and the company previously suggested it won't be able to satisfy its obligations.

Why It's Important

Sears could avert bankruptcy as CEO Eddie Lampert could pour his own money into the company as he has done in the past. The company on Tuesday named Alan Carr as an independent director. Carr is the CEO of restructuring advisory firm Drivetrain and has expertise in overseeing complex transformations, CNN said.

Shares of Sears plummeted 30 percent early Wednesday morning to trade below the 50-cent mark.

What's Next

Sears hasn't seen a profitable year since 2010 and has taken numerous steps to boost its cash position, including divesting its Craftsman tool brand, Lands' End line, and closing hundreds of stores.

"That failure has manifested itself in lost customers, lost market share, and a brand that has become tarnished and increasingly irrelevant," GlobalData Retail Managing Director Neil Saunders told CNBC late Tuesday. "The firm simply has no reason to exist."

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