Sears Holdings may soon be heading to bankruptcy, according to a report from the Wall St. Journal.
The report noted that Sears Holdings, the parent company of Sears and Kmart, has hired M-III Partners LLC to prepare a bankruptcy filing. According to its website, M-III touts itself as a corporate advisory firm that specializes in maximizing performance and creating long-term value for its clients.
M-III staff members have reportedly been at Sears Holdings headquarters at Hoffman Estates, IL, in recent days.
The news of a possible bankruptcy filing comes just a day after Sears Holdings added Alan Carr as an independent director to its board of directors. Carr has experience in, among other things, complex financial restructurings as well as serving as a director of reorganized businesses in the U.S. and Europe.
In late September, Sears CEO Edward Lampert put forth a plan to restructure the company’s debt as the retailer was facing what he called “significant near-term liquidity constraints” that include a debt payment in the middle of October.
According to a recent filing with the Securities and Exchange Commission, ESL Investments, a hedge fund owned by Lampert, proposed a 78% reduction in Sears current debt to approximately $1.2 billion, an 80% reduction of annual interest payments and lowering maturing debut obligations through 2020.
In addition, the ESL proposal includes asset sales of $1.75 billion, which includes the Kenmore brand, Sears Home Improvement business (SHIP) and the PartsDirect business of the Sears Home Services division, along with real estate transactions totaling $1.47 billion.