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The Journal reported that the company has hired M-III Partners to help with the bankruptcy proceedings.
M-III has been working with Sears for more than two years, a source familiar with the situation told CNBC on Tuesday. The source requested anonymity because information is confidential. Sears has enlisted an array of advisors over the past few years, including Lazard, as it grapples with its debt-load, CNBC has previously reported.
The news comes as the embattled retailer faces a $134 million debt due on Oct. 15, which the company has warned it may not meet.
Representatives from Sears and M-III didn’t immediately respond to CNBC’s request for comment.
Also on Tuesday, Sears said it added restructuring expert Alan Carr to its board — about a year after longtime Sears investor Bruce Berkowitz stepped down from his board seat.
A bankruptcy filing would cap years of efforts by CEO Eddie Lampert to keep the company afloat by steadily stripping out assets. Lampert, who has a controlling ownership stake in Sears, personally owns roughly 31 percent of the retailer’s shares outstanding. His hedge fund ESL Investments owns about 19 percent.
Lampert, though, is running out of time. Analysts say Sears would need to generate more than $1 billion a year to keep running, as its sales continue to erode.
Earlier this year, Lampert put forward a restructuring proposal through ESL after flagging fears about its ability to pay the looming Monday payment. But years of selling off assets and real estate have left Sears with little collateral it can offer lenders. It has there been unclear whether Sears’ current debt-holders will continue to support its restructuring efforts.
The longer Sears waits to file for bankruptcy, the more the value of its assets arguably decline. Meantime, the company is headed into the crucial holiday season, during which it will need sufficient confidence from vendors to agree to stocking up its shelves, even as bankruptcy rumors loom.
Ultimately, though, until Sears files for bankruptcy, the power remains largely in Lampert’s hands.
Lampert has poured money into the retailer multiple times when other options remained scarce. If no rescue emerges, Lampert could help it to fund its October payment, keeping Sears out of bankruptcy for at least another month.
Alternatively, barring any other form of salvation, he and Sears’ other creditors can begin to brace for bankruptcy.
Sears shares have fallen more than 80 percent so far this year to trade near 57 cents. The stock hit an all-time low of 56 cents earlier this week, bringing Sears’ market cap to $63.8 million.