Sears is planning to seek bankruptcy protection in NY as soon as Sunday night, though a court filing could slip into Monday, the sources added, asking not to be identified because the negotiations are confidential.
Early Monday morning, Sears announced it had filed for Chapter 11 bankruptcy - which would allow it to reorganize and possibly reemerge from bankruptcy with some part of the business intact - and received commitments for $300 million in debtor-in-possession financing to carry through the bankruptcy period while it restructures its debt and reorganizes its business.
Sears said it has created an "office of the CEO", which will be responsible for managing the company's day-to-day operations during the bankruptcy restructuring process.
Sears is 132 years old, but is just another retailer in recent years that has filed for bankruptcy, including Sports Authority, Toys R Us, Radio Shack, etc. Of all the remaining big-box department stores at that time, both Sears and Montgomery Ward should have been able to exploit online sales with a solid catalog-buying customer base.
Lampert, who is also the company's largest shareholder and lender, is hoping the deal, combined with a program of divestitures, will give Sears a fighting chance of escaping liquidation ahead of the key holiday shopping season, the sources said. The company operates 700 or Sears and Kmart stores.More news: Hurricane leaves Florida’s Mexico Beach in shreds
Lampert is using his hedge fund to purchase the Kenmore brand from Sears. Such a plan could potentially keep a slimmer Sears alive as a going concern, the sources said.
But they will need to do better than past year.
Chicago's Sears Tower was the world's tallest building when it was completed in 1973, but in the following decades consumers increasingly turned to e-commerce and brick-and-mortar rivals such as Walmart Inc and Target Corp.
"There was a time when Sears was the Amazon of its day". In its last fiscal year, it generated 16.7 billion United States dollars in sales, down from more than 50 billion USA dollars in 2008. In early afternoon trades on Friday, the stock was up 25 percent, at 43 cents, giving Sears a market capitalization of $47 million.
"The problem in Sears case is that it is a poor retailer", he wrote.More news: Trump, Xi to meet amid trade war tensions
With the writing on the wall that a bankruptcy was imminent, suppliers demanded Sears pay cash up front for the items in its stores, putting it at an even greater competitive disadvantage with other retailers.
Kmart stores and online channels also remain open.
Chapter 11 bankruptcy protection postpones a U.S. company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business. This is in addition to the previously announced closure of 46 unprofitable stores that is expected to be completed by November 2018.
As of May, it had fewer than 900 stores, down from a 2012 peak of 4,000.More news: After Being Held for Two Years in Turkey, Pastor Brunson is Released