Sears lenders are reportedly pushing for liquidation in bankruptcy talks

Shannon Stapleton | Reuters

A woman walks past store closing signs at a Sears in New Hyde Park, New York, October 10, 2018.

With a potential bankruptcy filing looming, Sears Holdings met with lenders on Wednesday, and the meeting ended without an agreement to keep the embattled department store chain operating, according to a report in the Wall Street Journal.

The paper said a group of lenders is pushing to liquidate the company and that a bankruptcy filing could happen as soon as this Monday, citing people familiar with the matter. Sears has a loan payment of $134 million due on Monday, which it’s warned before that it might not be able to meet.

Sears shares fell more than 15 percent to 41 cents in premarket trading Thursday on the news.

People said Sears CEO Eddie Lampert isn’t planning to pay the $134 million come Monday, having lent the company more than $1 billion already over the years to keep the retailer afloat.

In August, Lampert’s hedge fund — ESL Investments — made a bid to buy the storied Kenmore appliance brand and Sears’ home improvement division, as one more attempt to come up with cash. Sears appointed a special committee earlier this year to balance out the potential conflict of interest inherent in ESL’s bid.

Lampert has also proposed to cut more than $1 billion of Sears’ $5.5 billion debt load, along with selling another $1.5 billion worth of real estate.

But the committee has frustrated Lampert with its slow pace, sources familiar with the situation have told CNBC. It has refused to approve Lampert’s rescue plan, worried about opening the company up to litigation, Reuters then reported on Wednesday. Industry experts have suggested Sears may have made itself vulnerable to lawsuits by its strategy of selling its valuable assets to pay down its debt, instead of putting more money towards rehabilitating the company or paying down its pension plans.

Ahead of the holiday season, Sears is running into the problem of not being able to stock its shelves. Many vendors are now asking for upfront cash payments, and a person told the Journal that Sears needs several hundred million dollars just to get through the year.

Read the full report here.