Sears shares dive 27% after report says retailer is preparing for bankruptcy

Sears Holdings Corp which has been losing money for years has US$134 million in debt due

In a release, Sears said Carr has significant experience as a principal, investor and adviser leading complex financial restructurings, as well as serving as a director of reorganized businesses in the US and Europe.

M-III Partners has been working the past couple of weeks at Sears Holdings' headquarters in Hoffman Estates, Ill., people familiar with the situation told the Journal.

Sears stock dropped below the $1 threshold at the end of September. Neither Sears nor M-III Partners immediately returned requests for comment.

Sears, once the world's largest retailer, has struggled in the face of declining foot traffic in its stores. But if Sears is now in touch with banks to secure the financing needed for a bankruptcy filing, as CNBC reported Wednesday morning, that could send the surest signal that such a move may not be so far off.

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The bankruptcy filing would end a standoff between Chief Executive Officer Eddie Lampert, the retailer's biggest shareholder and lender, and a special board committee the company has formed to consider a rescue plan that would involve asset sales and a debt restructuring.

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. Sears is facing a debt repayment of $134 million on Monday, although one option would be for its CEO, the billionaire investor Edward Lampert, to make the payment and rescue the company from bankruptcy, the Journal noted. Carr is a former attorney at the law firms Skadden Arps Slate Meagher & Flom and Ravin Sarasohn Baumgarten Fisch & Rosen and now is the CEO of Drivetrain, an advisory firm for distressed businesses. Lampert bought Sears in 2004 and merged it with Kmart, in which he had a controlling stake, the next year. 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 almost 80 percent. Lampert divided the expanded company into dozens of units that competed for resources. Seritage Growth Properties, which has master leases on 230 Sears stores, slid 4 per cent, CBL & Associates Properties lost 1.1 per cent and Pennsylvania REIT was down 0.5 per cent.

Lampert himself has had a controversial tenure as chief executive. Lampert's strategy has often involved keeping Sears afloat with loans.

Lampert has been using his own money for years to keep Sears from collapsing as its customers defect and sales fall.

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