Sears Holdings Corp. has hired M-III Partners LLC to prepare a bankruptcy filing that could come as soon as this week as the cash-strapped company that once dominated American retailing faces a debt payment deadline, the Wall Street Journal reported. Employees at M-III Partners, a boutique advisory firm, have spent the past few weeks working on the potential filing. Sears continues to discuss other options and could still avert an in-court restructuring. Sears, which has been losing money for years, has $134 million in debt due on Monday. Edward Lampert, the hedge-fund manager who is Sears’s chairman, chief executive, largest shareholder and biggest creditor, could rescue the company, as he has done in the past by making the payment. But Mr. Lampert is pushing for a broader restructuring that would include shaving more than $1 billion from Sears’s $5.5 billion debt load, selling another $1.5 billion of real estate and divesting $1.75 billion of assets, including the Kenmore appliance brand, which he has offered $400 million to buy himself. Read more. (Subscription required.)
In related news, Sears said that it added restructuring expert Alan Carr to its board of directors as the company faces critical debt repayments and looks to overhaul its borrowings, Bloomberg reported. Carr is chief executive officer of restructuring advisory firm Drivetrain LLC and has over 20 years of experience with financially distressed companies as both an investor and an adviser, according to his firm’s website. Before his current role, he was a distressed debt and private equity investor at Strategic Value Partners LLC. He joins the board as the retailer faces $134 million of borrowings maturing on Oct. 15. ESL Investments, the hedge fund managed by Sears Chief Executive Officer Eddie Lampert, said in a filing last month that the debt coming due was among the obligations creating "significant near-term liquidity constraints" for the company. Sears mentioned those constraints as part of a proposal it offered to sell real estate to help pay down borrowings, which would cut debt by nearly 80 percent. Read more.
