Sears Holdings Corp. Chairman and CEO Edward Lampert does not plan to lend the department store operator more money to repay its $134 million debt, which is due Oct. 15, The Wall Street Journal reported Oct. 10, citing people familiar with the matter.
The development comes a day after the WSJ reported that Sears has hired investment and advisory firm M-III Partners LLC to work on its bankruptcy proceedings. The company does not have the funds to make the payment, one of the sources reportedly said.
According to the newspaper, the company's board did not approve Lampert and his investment vehicle ESL Investments Inc.'s proposal to buy Sears' Kenmore brand after it reportedly became clear that Lampert's proposed restructuring plan was not winning creditor support.
However, one of the sources reportedly said the CEO "isn't giving up on Sears" and is willing to continue investing in the company "as long as it has a future." Lampert's restructuring plans for the store chain included closing unprofitable stores and selling properties in order to avoid bankruptcy.
Lampert has repeatedly helped out Sears with short-term loans. In February, the retailer borrowed $20 million from JPP LLC and JPP II LLC, which are controlled by Lampert's hedge fund, ESL Investments. The amount brought Sears' borrowings from Lampert to $210 million.
As of Aug. 4, Sears had $193 million in cash, the WSJ said.
The publication added that the retailer needs money to stock its remaining Sears and Kmart stores in time for the holidays as many vendors, including Wicked Cool LLC, which makes Cabbage Patch dolls and Pokémon toys, now require the company to pay cash upfront.