It looks like Eddie Lampert will not be coming in to rescue Sears.
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The hedge-fund manager who controls Sears Holdings, has repeatedly bailed out the struggling retailer with short-term loans. Not anymore.
Lampert, who is Sears's chairman, chief executive, largest shareholder and biggest creditor, doesn't plan to lend the company money to repay $134 million in debt due Monday, people familiar with the matter told Dow Jones Newswires.
The Sears board decided against selling the Kenmore brand to Lampert for $400 million, as he had proposed, after it became clear his broader restructuring plan that he went public with late last month wasn't winning support from creditors, this person said.
The department-store chain is reportedly in talks with banks to raise several hundred million dollars.
Sears is preparing for a potential bankruptcy filing that could come within days.
The Wall Street Journal first reported on Tuesday that Sears has hired M-III Partners, a boutique advisory firm, to prepare a chapter 11 filing.
The company's already battered stock dropped another 17% on Wednesday, to 49 cents apiece, and Sears bonds were also under pressure.
The Sears notes coming due on Oct. 15 changed hands at 50 cents on the dollar Wednesday, having traded most of Tuesday at 86 cents, according to FactSet.
Sears hasn’t earned a profit since 2010.
The company faces a cash crunch as it needs to stock its remaining Sears and Kmart stores for the holidays, and many vendors, from appliance makers to toy companies, now require the company to pay upfront in cash.
Sears has canceled orders from some appliances manufacturers, according to two appliance industry consultants.