The Globe and Mail reports in its Thursday edition that Sears Holdings is preparing to file for Chapter 11 bankruptcy protection in the coming days following years of declining sales, casting doubt over the survival of what was once the world's largest retailer.
A Reuters dispatch to The Globe says that 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 formed to consider a rescue plan proposed by Mr. Lampert that would involve asset sales and a debt restructuring.
The committee has been resisting the plan amid concerns that creditors and shareholders would sue over it being too favourable for Mr. Lampert. His history of financial engineering at Sears for more than a decade through deals tied to his hedge fund, ESL Investments Inc., could be subjected to new scrutiny by Sears's creditors in bankruptcy court.
Both Mr. Lampert and the Sears special committee now accept that only a court-supervised process can determine the company's future. A $134-million (U.S.) debt payment that Sears has to meet on Monday has added pressure on both Mr. Lampert and the special committee to find a resolution.
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