Sears could file for bankruptcy as soon as this week

Sears store in Garden City NY. REUTERS  Shannon StapletonMore

The committee has been resisting the plan amid concerns that creditors and shareholders would sue over it being too favorable for Lampert. Neither Sears nor M-III Partners returned requests for comment. CNBC earlier reported that the company was arranging a bankruptcy loan, known as debtor-in-possession financing.

Shares of real estate investment trusts (REIT) exposed to Sears properties also fell Wednesday.

In August, the board said it was weighing an offer from Lampert that Sears should sell its Kenmore brand and said ESL might offer to buy it if it was willing to sell. But its declines goes back decades, well before the growth of online shopping that threatens traditional brick-and-mortar retailers.

Sears revealed Tuesday night that investor Bruce Berkowitz of Fairholme Capital Management dumped 142,000 shares of Sears in the last few days, for only 59 cents to 65 cents a share. While the SPDR S&P Retail ETF (XRT) is up 6.5% year to date, and fellow department stores like Macy's (M), Kohl's (KSS), and Nordstrom (JWN) have climbed more than 30% since the start of the year, Sears has lagged-and how.

Lampert has invested and lent to Sears many times over the years, making him and his hedge fund the company's largest shareholders with a stake just shy of 50 percent, as well as its biggest creditor, with about $2.5 billion owed to him or funds he controls. The other half is leased, and there would be little cost savings from rent restructurings of those stores since Sears already pays well below market rents. That kind of liquidation would be especially hard for lower-tier malls and shopping centers hard-pressed to find tenants in low-demand areas.

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But many flailing retailers have tried that tactic before and failed (see: Toys "R" Us).

J.C. Penney's former CEO Marvin Ellison in 2016 positioned the Plano-based retailer to win shoppers from Sears as it closed stores by adding kitchen and laundry appliances to stores.

Larry Perkins, founder and CEO of consulting firm SierraConstellation Partners, told the Washington Post on Wednesday that Sears' hiring of bankruptcy experts "is not a sure sign by any means, but it's certainly a leading indicator" that bankruptcy could be on the horizon.

Typically at the point of bringing in advisers, a company is evaluating a range of alternatives, including other restructuring plans or the selling off of assets.

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