is inching closer to a deal with lenders about a bankruptcy plan that would close at least 150 stores and provide a lifeline loan to keep a small footprint of around 300 locations open, according to people familiar with the matter.
As part of the deal, the lenders, including Bank of America Corp., Wells Fargo & Co., and
would provide emergency financing of up to $500 million, the people said.
Sears is expected to file for chapter 11 bankruptcy on Sunday, the people said. The filing would come ahead of $134 million in loans that Sears must repay on Monday.
As part of the proposed reorganization plan, Sears would close roughly 150 stores immediately, one of the people said. Another 250 stores will be under evaluation. About 300 stores would remain open.
The company currently has about 700 Sears and Kmart stores, this person said.
The Wall Street Journal first reported on Tuesday that the 125-year-old chain hired M-III Partners LLC, a boutique advisory firm, to prepare a bankruptcy filing. How much short-term financing the company is able to line up before its filing will help determine whether Sears can continue as a going concern and how many stores survive.
Initially, the banks took a harder stance and were only willing to provide debtor-in-possession financing that would allow Sears to sell inventory and close all of its stores. But as discussions progressed, the parties coalesced Friday around a plan to keep Sears operating with a much smaller footprint, the people said.
Assets such as the Kenmore appliance brand and the Sears Auto Centers could be sold once the company files for bankruptcy, one of the people said.
One potential bidder is hedge-fund manager Edward Lampert, according to a person familiar with the situation.
Mr. Lampert, who is Sears’s chairman, chief executive, largest shareholder and biggest creditor, offered to buy Kenmore for $400 million in August. But the deal never received the blessing of a special committee of Sears’s independent directors. And it was put on hold after it became clear that creditors wouldn’t support a broader out-of-court restructuring proposed by Mr. Lampert.
Mr. Lampert, who has controlled Sears for more than a decade, has repeatedly bailed out the retailer with short-term loans. However, he is unwilling to lend further money if a reorganization plan isn’t agreed upon with the banks, one of the people have said.
The banks are the principal lenders on a $1.5 billion asset-backed credit facility secured by inventory, as well as credit-card and pharmacy receivables.
—Soma Biswas contributed to this article.