10 October 2018
Metal gates block one of the entrances to a Sears store that is closing on September 5, 2017 in Provo, Utah.
Image copyrightGETTY IMAGES
Sears has closed hundreds of stores in recent years.
Shares in Sears Holdings plunged by more than 30% on Wednesday following a report that the US retail chain was preparing to file for bankruptcy.
The firm was preparing the filing ahead of the deadline on Monday for a $134m (£101m) debt payment, the Wall Street Journal reported.
Sears, which also owns Kmart, did not comment on the report.
The firm, which has been losing money for years, is still looking at alternatives, the newspaper said.
The company, which was once America’s biggest retailer, has been rapidly closing stores and selling properties and other assets as it tries to staunch the losses.
But it has struggled to compete against giants such as Amazon and Walmart and is grappling with a debt load of more than $5bn.
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In recent weeks, businessman Eddie Lampert – who serves as the company’s chief executive, biggest investor, landlord and significant creditor – published a proposal to restructure the firm’s debt that would avoid bankruptcy.
Critics have said the latest plan would give preference to debt owed to his own companies, which hold about $1.8bn in Sears’ debt.
In the past, his funds have extended credit in the face of debt deadlines, allowing Sears to avoid bankruptcy.
Now, in addition to Monday’s deadline, the firm is facing more than $600m in debt that is due to mature over the next year.
The firm on Tuesday announced it had appointed Alan Carr, the chief executive of Drivetrain, to its board of directors.
Mr Carr has experience with financially distressed companies and restructuring, according to his biography.